To show C-R equations are satisfied at $z=0$, use $u = \sqrt{xy}$ and $v = 0$ and take the appropriate partials. You should be able to see that they ONLY hold at $z=0$- nowhere else. This means that $f$ NOT differentiable when $z \neq 0$.
You can show it's not differentiable at 0 from the definition. Differentiable means that $$\lim_{h \rightarrow 0} \frac{f(z+h) - f(z)}{h} = 0$$
So for $z=0$, you're looking at $$\lim_{h \rightarrow 0} \frac{f(0+h) - f(0)}{h} = 0$$
Use $h = x+iy$, so $f(0+h) = \sqrt{xy}$, $f(0) = 0$, and you're looking at $$\lim_{(x,y) \rightarrow (0,0)} \frac{\sqrt{xy}}{x+iy} = 0$$
Take this limit along two different paths to show it does NOT exist. Along $x=0$ and along $y=x$ should do it, for example.