The problem is, that the focus is on the Info, after adding a faces circle. This problem started with macOS 10.15 Catalina and is still reoccurring occasionally.
There are a few work-arounds:
- Close the info panel after adding the faces circle, then you can drag it and adjust the size of the faces circle.
- Or click into the background of the photo outside the circle after adding the faces circle. Then you should be able to drag the circle.
- Or type a name into the name field, even with the circle in the wrong position. Then you can drag the named circle to the correct face.
If none of this works, close Photos and restart it. Then the naming may work as intended for a time. Sometimes I have to restart the Mac.
You may want to send feedback to Apple that the problem still persists: Feedback - Photos - Apple