My more logical, less formulaic proof: (its a bit long, but it covers all cases)
If x and y are both positive, all parts are positive
If one is positive and one is zero, all parts are positive, or zero (nothing negative)
If both are zero, all parts are zero, and it is not negative.
If both are negative, all of the parts are positive, as the signs cancel
If one is negative and one is zero, all parts are positive or zero (the square of the negative is positive, and the multiplied is zero)
The only case which is worrisome is when one is positive and one is negative
Let's say that x is positive, y is negative
This means that $x^2+y^2+xy$ is made of 3 parts, the first square is positive, the second square is positive, the third term, the multiplication is negative.
If $|x|>|y|$ then, multiplying both sides by x, we get $|x^2|>|xy|$ and we know the equation will be more positive than negative
If $|x|<|y|$ then, multiplying both sides by y, we get $|xy|<|y^2|$ and we know the equation will be more positive than negative
If $|x|=|y|$ then, multiplying both sides by x, we get $|x^2|=|xy|$ and we know the equation will be more positive than negative, because $y^2$ is positive and will make it positive, even though $x^2$ and $xy$ cancel out