The circle is the shape of the brush head.
If your brush strokes on the canvas are applying as a series of circles, then you need to adjust the spacing - around 20% is fairly decent.
In CS the settings are in the 'Brushes' palette>'Brush Tip Shape' in previous versions (never got v7) click the little down arrow on the brushes options bar next to the icon of the present brush head.
Moe: It could have been a real ugly situation, but luckily I managed to shoot him in the spine.