I'd say you have to do as you said in your first post.
The ORIGIN needs to be closer to, or on the profile.
If you draw a 1" dia. circle and have the 0,0 origin 5' away, you'll get what you are seeing.
From my limited experience,
Russ

Just be sure to define the 0,0 origin every time you use the CAM.....never have to go back then.

Okay, I get it now. I am trying to figure out the zeroing part. Can one zero on a certain point on the material you are cutting? I have a piece of stock not much bigger that what I want to cut. Can I zero in a certain mark on the stock to ensure the positioning? Can I zero on this mark and expect it to be 0,0 on the work offset?

Yes, exactly right on all accounts.
It can be anywhere you wish. On the part or on the fixture or anywhere you like.
Just be sure to define it.

Ideally, you should be drawing your parts in AutoCAD in the positions you want to cut them, relative to the origin.

Thanks Jerry, now I know I need to be aware of this when drafting and editing.