1. First, let potlatch 2 draw an incorrectly sized circle for you.
Basically, I start at the top of a circle, and draw 8 points, 45 degrees apart.
Then I hit the circle icon. This will typically give you a circle a totally different size from what you roughly sketched out.
2. Move that wrong sized circle next to the circular object you're drawing.
3. Press the 'copy parallel' button. As you move the mouse, a circle copy of a different size will be made.
Just move the mouse till the copied circle is the right size.
4. Move the copied circle to the right spot. Click on a circle segment (not a node) and drag it to the correct position.
Here's my suggestion for fixing the circle tool.
First, it should calculate the centroid of the points in the polygon you used.
Add up the X' coordinates, and divide by the number of nodes. Add up the Y coordinates, and divide by the number of nodes. Unless you're drawing a circle on the 180th meridian, this should give you the correct center point.
Second, it should calculate the average radius. Calculate the distance from the centroid for each point in the polygon, and divide by the number of points. Voila, average radius.
Use a 'for loop' to create a new set of points at radius r and incrementing the angle.
Judging by the behaviour of the current circle tool, I'd guess it's trying to do a 'curve fit', but it's acting up for me.