I have a proof that every quaternion algebra over a field $A=\left(\frac{a,b}{F}\right)$ is simple, i.e. has no nontrivial two-sided ideals, which appeals to the algebraic closure of $F$ and the elevation of ideals $I\subset A$ to ideals $\overline I\subset\left(\frac{a,b}{\overline F}\right)=M_2(\overline F)$ and uses properties of this latter space.
EDIT: Sorry, I didn't realise this notation wasn't common. $A$ is a four-dimensional algebra over a field $F$, which we assume has characteristic $\neq 2$, spanned by $\{1,i,j,k\}$ thus: $$ i^2=a\,1\quad j^2=b\,1\quad ij=-ji=k. $$ where $a,b\in F^\ast$.
However, I'd like to be able to accomplish this proof without using the algebraic closure, but I'm not sure what the most appropriate method is. Here's my proof:
Take some nonzero $I\subset A$ and examine an arbitrary element $x_0+ix_1+jx_2+kx_3=x\in I\subset A$. Then we know $$ (x_0+ix_1+jx_2+kx_3)(x_0-ix_1-jx_2-kx_3)=x_0^2-ax_1^2-bx_2^2+abx_3^2\in I $$ since $I$ is closed under right (and left) multiplication.
Now it would be great to suggest that this element is nonzero. If that were true, then we'd be done. If it's zero, then we have $$ x_0^2+abx_3^2=ax_1^2+bx_2^2. $$ Is this possible?
LAST EDIT: I found a good proof of what I wanted to do here. Thanks everyone for your help!
I'll retract this if whatever $A=\left(\frac{a,b}{F}\right)$ means prohibits my example :)
I decided to run fast with my "what if $F$ has characteristic two" comment fast and mention why the quaternions over a field of characteristic 2 are never a simple ring.
Since $-1=1$ in such a ring, the generators wind up commuting instead of anticommuting, so the whole thing winds up commutative. Thus the ring would be simple iff it is a field. However, as mentioned, $(1+i+j+k)\cdot(1-i-j-k)=0$ in that characteristic, and so it is clearly not a field.
Thanks for clarifying the original post. That construction is just the Clifford algebra of a two dimensional space with the symmetric bilinear form $\begin{bmatrix}a&0\\0&b\end{bmatrix}$. You will find a lot said about this when the form is nondegenerate (that is, $a,b$ are both nonzero.) If you check out the link, you can see that for real algebras, an even dimensional vector space with a nondegenerate form is isomorphic to a full matrix ring over a division ring (which is necessarily simple).
I wish I could instantly recall if the same is true for rings of characteristic other than 2. My memory is telling me something like that appears (or at least, the proof for "quaternion algebras") in Jacobson's Basic Algebra I in the section on the Hurwitz problem (7.6, I see from the googlebooks preview).