Step 1
If you haven’t seen them already you need to read the latest guide of Security and Encryption Faq. That will get you started, answer most of your questions and give you an idea of what the whole thing is about. I mean you can follow that if you are paranoid etc.

Step 2
Downloading and installing CustomizeGoogle is a must and enabling the Anonymize the Google cookie UID option in the Privacy tab is important too! Not only that CustomizeGoogle takes care of the privacy worries but it also has many other options which can tweak the majority of the services provided by Google.

Anonymize Google cookie UID

Once that is selected go to the Preferences tab and get your Google Search settings to be saved locally so that they apply each time you run a query. If there is no cookie involved, no data is saved so therefore your settings can’t be reapplied each time you search.

CustomizeGoogle Preferences

Step 3
While we have set our searches to be anonymous you will notice that if you use the search bar within Firefox for your searches that the settings which have been set in CustomizeGoogle do not all apply there. The blocking of the cookie UID does work, but the locally saved preferences are not applied each time a query is made. To overcome I did some snooping around and some Googling and found a workaround.

3.1. Go to http://www.google.com
3.2. Click on Preferences on the right side of the search box
3.3. Set your preferences the way you want and click Save Preferences and you should be back where you started at the search box
3.4. Don’t fill anything out, just press a single Space in the main search box and click on Google Search
3.5. Once the search query has completed copy what is in the Address box to the clipboard (Right-click > Copy)

3.6. Now go to C:\Program Files\Mozilla Firefox\searchplugins and select google.xml

Locating google.xml

3.7. Open it in Notepad and replace what has been highlighted with what was in the Address box which you copied to clipboard.

<url type="application/x-suggestions+json" method="GET" template="<strong>http://suggestqueries.google.com/complete/search?output=firefox&amp;client=firefox&amp;hl={moz:locale}&amp;q={searchTerms}"/>

And it should look something like this:

<url type="application/x-suggestions+json" method="GET" template="http://www.google.co.uk/search?hl=en&q=+&btnG=Google+Search&meta=&lang=all&safe=off&num=10&aq=f&oq="/>

Good luck!