What I think you are getting at here done with two or more layers. Put the image you want to "enclose" into a circle on top of the layer containing that circle. (This circle layer can be what ever you want to enclose).
Line them up one over the after, select the top layer (layer to be enclose) and press "CTRL + G" (sorry I do not know the mac short cut but if you are a mac user you will get it), and tada, image enclosed in a circle! :D Hope this helps,
Warm Wishes,