In chapter 10 of Animal Farm, the pigs begin walking on two legs. Is this evolution a sign of progress or not?

In terms of scientific development, yes, the pigs walking on two legs is definitely an evolution, however, in terms of events in the novel, it depends on from whose perspective this new occurrence is perceived. If one perceives it from the pigs' standpoint, they will see their action as an advancement. From the other animals' point of view, though, it will be a step in the wrong direction, for their rebellion was, in fact, to get rid of their two-legged and dictatorial masters, the humans.

During his passionate speech at the beginning of the novel, when he was addressing all the animals in the big barn, Old Major specifically stated:

I merely repeat, remember always your duty of enmity towards Man and all his ways. Whatever goes upon two legs is an enemy. Whatever goes upon four legs, or has wings, is a friend.And remember also that in fighting against Man, we must not come to resemble him. Even when you have conquered him, do not adopt his vices. No animal must ever live in a house, or sleep in a bed, or wear clothes, or drink alcohol, or smoke tobacco, or touch money, or engage in trade. All the habits of Man are evil. And, above all, no animal must ever tyrannise over his own kind. Weak or strong, clever or simple, we are all brothers. No animal must ever kill any other animal. All animals are equal.

All Major's admonitions were ignored by the pigs. They adopted all man's vices and denied the other animals equality. They ruled over them in much the same way the humans did. In general, the other animals were constantly tired, miserable and hungry whilst the pigs lived lives of luxury and privilege. They lived as humans.

Walking on two legs signified the final phase of the pigs' transformation from animal to human. Not only had they adopted all man's vices and habits, but they had also assumed his posture. What made it even worse was the fact that walking on two legs also foretold of another one of man's terrible habits, the constant physical abuse of the working animals symbolised by an instrument of torture.

...out came Napoleon himself, majestically upright, casting haughty glances from side to side, and with his dogs gambolling round him.

He carried a whip in his trotter.

So shocked were the animals on witnessing this that there was a deathly silence. They were terrified and it was as if the world had turned upside down. Those who would have protested were stifled when the sheep started bleating loudly:

"Four legs good, two legs BETTER! Four legs good, two legs BETTER! Four legs good, two legs BETTER!"

Finally, to make sure that the animals knew their place, the original commandment, "All animals are equal" was replaced by the paradoxical, "All animals are equal, but some animals are more equal than others."

For the poor, suffering animals, everything had gone full circle. They were exactly, or even worse off, from where they started. The only, and brutally ironic, result was that their erstwhile tyrannical master had been replaced by a new, even more autocratic one - their own kind, in the form of the pigs.

In the end, there was no distinction between humans and pigs. The transformation was complete, as the final sentence in the novel clearly signifies:

The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.