Creating an image template can be done several ways and with different drawing programs.
Choose whichever you like best.

I personally prefer to create the circles made in Paint a standard drawing program on Windows.
It gives better and neater circles then Photoshop. (no experience with GIMP however)
Best is to try the different drawing programs you have and compare the circles it draws and pick the one to your liking.

There are some extra steps for even numbered circles, but later on that in the guide.

• Create a new image X by X pixels for a perfect circle or X by Y for and Ellipse. A transparent background will also be transparent in the game.
  
• Set Line width to exactly 1 pixel, to trace a 1 block width circle.
  
• Draw the circle from exactly one corner to another corner. Outline only works easiest.
  
• Save the image as either PNG or JPG

With the latest updates images can now easily be loaded in the game.

• Place the images in the From the Depths Imagery folder
  
• In windows this is in ..\Users\<Username>\Documents\From the Depths\Imagery
  
• Rename the file by adding # in front of the filename. You can change the file name too.
  
• A restart of the game is likely required.

Last step in making pixel perfect circles.

Hologram Projectors are now in the Decorations tab > Image Displays in the build menu.

• Place a Hologram Projector and open it's settings with Q
  
• To the Right is a Configurations panel. If not selected, select Hologram and not Text
  
• In the URL you enter the name of the image you want to use. You need to add the Hastag # but not the file extension .PNG or .JPG.
  So if your file name is #12x12Circle.jpg you only enter #12x12Circle
  
• Set Width and Height to exactly the same size as your image. This will make the 1x1 pixels the same size a 1x1 block in game.
  
• Change Projector Range, in the left hand panel, to your liking. If the image disappears in the blocks, increasing the value with just 0.01 helps. (it's called Z-fighting in render terms)
  
• Important note : If your circle is Even numbered eg 12x12, you need to center your template.
  This can be done by Right / Left Shifting and or by Up / Down Shifting the image position by either +0.5 or -0.5

-Easiest and fastest way is to just build a quarter of the circle and then just prefab and paste

-some extra notes :
It is very easy to accidentally deactivate or hide the hologram projector invisible
So don't panic if the image or the hologram projector is all of a sudden gone.
The enable disable option are in the top left of the left hand panel

And that would conclude this guide.

-projector range was intentionally raised higher for purpose of screenshot