Mike,
The shape you see on screen depends a lot upon the screen rez you are running at. It will only look correct if the screen image has a 4:3 aspect ratio (such as 800x 600, 1024 x 768,1152 x 864, 1600 x 1200). At 1280 x 1024 you have an aspect ratio of 3.75: 3 which will look distorted.
You can also alter the aspect ration by ‘stretching’ the image to fill the monitor screen, and again this will distort the image.
Create a circular selection area in Photoshop using Shift to constrain to a true circle. Does it look oval? If so, it’s your screen adjustment that’s at fault.
Mike, if you’re using a flatscreen monitor and the resolution is set to less than the screen’s native resolution, a square image might have an oblong shape. As a quick check, open a new file with an image size of 500 x 500 pixels (or whatever–just make sure it’s square). Then measure it with a ruler. If it’s not square, your monitor may have a front-panel adjustment to fix it. Samsung for example has three settings, Normal, Expanded 1 & Expanded 2. IBM has a Scaling option, and so on. Or if you’re using a CRT, try the square image test and just adjust the H. and V. sizes until the image really is square. Then print it, just to make sure all’s well.