Show that $\displaystyle\lim_{(x,y)\to (1,0)} \frac{(x-1)^2\log(x)}{(x-1)^2 + y^2}$ exists. Also find the limit.
Method 1
$\frac{(x-1)^2}{(x-1)^2 + y^2}$ is less than $1$. Therefore, $\frac{(x-1)^2\log(x)}{(x-1)^2 + y^2}<\log(x)$. Also, $\frac{(x-1)^2\log(x)}{(x-1)^2 + y^2} \geq 0$ for all $(x,y)$ in the domain.
Therefore, we have,
$$ 0\leq\frac{(x-1)^2\log(x)}{(x-1)^2 + y^2}\leq \log(x) $$ But $\lim_{(x,y)\to (1,0)}\log(x)=0$.
Hence, by the squeeze theorem, $$ \lim_{(x,y)\to (1,0)} \frac{(x-1)^2\log(x)}{(x-1)^2 + y^2} = 0 $$
Method 2
Let $\varepsilon>0$. Choose $\delta<e^{\varepsilon}-1 \implies\log(\delta+1)<\varepsilon$.
If,
$(x-1)^2+y^2<\delta^2 \implies |x-1|<\delta \implies |x|-1<\delta$
$\implies x<\delta +1$ $ (\because$ $\log(x)$ is not defined for $x<0)\implies \log(x)<\log(\delta+1)$,
then, $$\left|\frac{(x-1)^2\log(x)}{(x-1)^2 + y^2}-0\right| \leq |\log(x)|< |\log(\delta+1)|<|\varepsilon| = \varepsilon$$
Hence, by $\varepsilon$-$\delta$ definition of limits, $\displaystyle \lim_{(x,y)\to (1,0)} \frac{(x-1)^2\log(x)}{(x-1)^2 + y^2}$ exists and is equal to $0$.
Are both my methods correct?
You have the main idea correct. But there are details that you need to be careful as some of the comments already point out. For instance $\log(x)\ge 0$ is not always true.
Also, your "method 2" would be less cumbersome if you apply continuity of the logarithm instead of trying to solve an inequality in a sharp way to get $\delta$.
Eventually, you want to show that $$ \lim_{(x,y)\to(1,0)}\frac{(x-1)^2\log(x)}{(x-1)^2+y^2} = 0 $$
Here is a short proof.
Proof. Observe that $$ 0\le \left|\frac{(x-1)^2\log(x)}{(x-1)^2+y^2}\right|= \left|\frac{(x-1)^2}{(x-1)^2+y^2}\right||\log(x)| \le |\log(x)|\;. $$ Also $\displaystyle \lim_{(x,y)\to(1,0)}|\log(x)|=0$. Thus by the "squeeze-type" theorem, $$ \lim_{(x,y)\to(1,0)}\frac{(x-1)^2\log(x)}{(x-1)^2+y^2} = 0\;. $$
I don't see an explicit "squeeze theorem" of the multivariable function version. Though the idea is of course the same. One may write out the detail of $$\lim_{(x,y)\to(1,0)}|\log(x)|=0\tag{1}$$ as follows.
Let $\epsilon>0$. By continuity of the logarithm (and the absolute value function) at $x=1$, there exists $\delta>0$ so that $$ |\log(x)|<\epsilon\quad\textrm{whenever}\quad |x-1|<\delta\;. $$ Now, if $|(x,y)-(1,0)|<\delta$, then $$ |x-1|<\sqrt{|x-1|^2+|y|^2}<\delta $$ and hence $|\log(x)|<\epsilon$.
The estimates above could also give you an $\epsilon$-$\delta$ proof of the limit.