This got questioned a few times during games over the weekend at my FLGS:

Can the 1st player choose to deploy all their ships inside the ambush zone?

Fleets are deployed as normal - Into the deployment zones.

On odd deployments they must be deployed in the Ambush Zone.

On the even deployments there is no scenario rule allowing you to deploy in the Ambush Zone, so you deploy as normal into your deployment zone, which is detailed in the scenario rules.

No, they can only do so (and must do so) on their odd-numbered turns, and they must deploy all of their ships before any of their squadrons. Deployment should look like this:

1st player ship in ambush zone

2nd player ship in deployment zone

1st player ship in deployment zone

2nd player ship in deployment zone

1st player ship in ambush zone

2nd player ship in deploment zone

1st player ship in deployment zone, etc.

Squadrons only deploying after all of that player's ships have, but may be within distance 2 of any of that player's ships. All of your squadrons could deploy forward or hang back, and you could even deploy them engaged with enemy squadrons since they don't have to be in the ambush zone, only the setup area.