I am so confused

From: someone-way-lost
Date: 23 Jul 2004
Time: 14:53:24
Remote Name:


I know it's dumb, but can you believe I'm having trouble following the turorial provided? I'm stuck on the part about the circular peices being cut out of the square. When I use the Ellipse tool, all I get is a circle without the dotted lines that stays in one place and overlaps the square. I'm sure I'm doing something probably very simplistically wrong, but for the life of me, I can't figure out what. This is a totally new program for me. Would someone mind trying to explain what I'm doing wrong?