The circle you see is because the video is buffering. It can mean a few things. Your line speed may not be very good. Youtube could be having some bandwidth issues at the time as well or you may have issues with your browser.
You can check your line speed @
http://dslreports.com/ You will see a link that says 'tools' click on that and then choose speed test. If you take the speed test and your speed is below 768 (or they may show 7680) then you may have issues with streaming video.
You may also have problems with your house wiring or outside wiring. If you have ATT DSl you can go into the dslreports.com forum for ATT which is
http://www.dslreports.com/forum/ilec,am Make an account and then post in the ATT direct section. This section goes directly to ATT support staff. I find it much faster than dealing with the tier 1 morons on the phone. Post that you want a line test and in a couple days they will reply with data that will tell you your line information. Depending on your modem model you may also be able to 'log' into your modem and see this information. If you have a large amount of line noise and your house is older you may want to look into getting a P.O.T.S -- (plain old telephone service) splitter. This will split the line so your dsl signal will bypass all the house wiring. Very easy to install yourself or you can have the telephone company do it for a fairly hefty charge. ($200) This can make a dramatic difference if your house wiring is bad.
For instance in my home, which was built right after WWII for the vets coming home the wiring is horrible. I installed my own splitter (a seicore) and my line speed went up 100Kb and I've never had any issues since. Those filters they give you for every phone in the house are garbage.
You also need to check your connection to youtube to see if you have any type of issues on the way to youtube. In order to do this you need to open up the command prompt window. (assuming your on a windows based operating system) Go to start / run/ and type in CMD. This will open a new dos window. In the window type in ping youtube.com
You will get a readout such as : Microsoft Windows [Version 6.1.7600]
Copyright (c) 2009 Microsoft Corporation. All rights reserved.
C:\Users\BOX01>ping youtube.com
Pinging youtube.com [74.125.127.93] with 32 bytes of data:
Reply from 74.125.127.93: bytes=32 time=74ms TTL=53
Reply from 74.125.127.93: bytes=32 time=74ms TTL=53
Reply from 74.125.127.93: bytes=32 time=74ms TTL=53
Reply from 74.125.127.93: bytes=32 time=74ms TTL=53
Ping statistics for 74.125.127.93:
Packets: Sent = 4, Received = 4, Lost = 0 (0% loss),
Approximate round trip times in milli-seconds:
Minimum = 74ms, Maximum = 74ms, Average = 74ms
You want to have no packet loss which is the (0% loss) you should also have a fairly low number for ping. If you have packet loss more than 1 or 2% you will have issues. If the ping is high (200+) you will have issues as well. If you do have high ping and packet loss then it gets a little more in depth trace to find the router that is causing the issue but this should be enough information to get you in trouble
As for browser no matter which browser you use just make sure your flash is upgraded. I personally use firefox over IE but everyone has their own preference.