Picture in picture with circle effect

I am a new user to Prem Pro CS3. I have a basic clip in layer 1, I then have a second clip in layer 2 which I have resized for picture in picture, I have also rotated this. This is all fine. However I need the picture in picture to appear as a circular image - a face will appear over a watch and give our secret agents a mission. So I have added a circle effect and sized it so that it does appear correctly over the watch face once the alpha stencil is set and it does work BUT I am having great trouble positioning the image -  the image I see in the preview window shifts from when I position it to once I click away from the effects panel and where I pplace it seems to have little relation to where I actually want it. I have suceeded through trial and error but I don't understand what is going on under the hood. Can anyone help please?
Thanks

Thanks Eddie for reading my post. I have attached the two screenshots. Click away is once I have ckicked away from the circle effect and click on circle is obviously when I have clicked on the effect control. You will see that the circle moves. Thanks

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