James
Have you set the elevation first? Select the elevation box in the 3 point circle command and then pick a point at the elevation you want the circle to be, then select the 3 points for the circle location and diameter.
This will create a flat / level circle, the only elevation will be the first on selected.
If you ant a circle that is not level you need to slice a plane and place the circle in the cutting plane view.
Hope this helps.