Beneficial bacteria grows on everything in your tank: in the rocks, all over the filter, in the filter media - everywhere. However, you want as much as you can in the filter, with water actively running through it. Like they're saying, you can jut add a sponge to the filter for a place inside the filter for bacteria to grow. This is because of the huge internal surface area of the sponge. A regular kitchen sponge would work fine (as long as it's never been used).
+1 Cliff, AquaClear is also a good brand.
With the mechanical filter, you can usually get "filter floss" at any LFS. It's just a mesh-like material that you place in the filter. It needs to be replaced from time to time, and washing it out a bit before replacing it never hurts.
However, as it holds bacteria, it may be a good idea to wash it in tank water from a partial water change. If your sponge for bacteria ever gets grimy - and I mean REALLY dirty, not just a different color - you can wash it in the used tank water as well. However, don't do this often, and never wash it in sink water, if for no other reason than the difference in pH.
You shouldn't have chlorine in your tap water because it's from a well, but it may have a lot of minerals, which would make it hard. Make sure to test for this once you get a test kit. If it's too high, you can always get a water softener pillow, which is something you can just add into your filter.