Why did the First Doctor land in a junkyard, is there some particular reason for this?
And when they did land in a junkyard, why did the TARDIS become a police box instead of a piece of garbage? Surely that would have been harder to notice for other people.
I'm unaware of any canon reason the TARDIS chose to land in the Junkyard in the first episode of Doctor Who. Presumably it was simply chosen as a location that was sufficiently anonymous but still afforded the Doctor the ability to have a listed address.
Regarding the reason it's a policebox (as opposed to another shape) according to the minisode "Meanwhile in the TARDIS", the 'chameleon circuit' is intended to provide the ship with an adequate disguise by;
"within the first nanosecond of landing its chameleon circuit analysed the surrounding area, calculated a twelve-dimensional data map of all objects within a thousand-mile radius and then determined which outer shell would best blend in with the environment."
It's worth pointing out that a thousand mile radius would take in the whole of the UK and most of Europe (as well as a large area of sea) and not just the immediate surroundings of the junkyard although I think we can assume the TARDIS would be smart enough to prioritise the more immediate surroundings and recognise that it's on land.
I'm not aware that there is anything in the Dr Who canon that suggests that "An Unearthly Child" is anything other the first adventure of the Doctor that we see.
Therefore there is plenty of scope for the Chameleon circuit to have malfunctioned at some earlier time, when the current disguise was in fact more apt.
The TARDIS had a malfunctioning chameleon circuit, at the time of the debut of the first episode of Doctor Who in 1963 it was common to see Police call Boxes in British Cities. That is why the Tardis disguised itself as a Police box, as far as the junkyard goes the reason it didn't disguise itself as junk was because this was only the first appearance of The Doctor on television, it is unknown if he had adventures previous to this, but it is more than likely that he did.
