OK.. this is a good start, because you will have to learn some spherical astronomy first, which is good for undestanding things..
Fistly, in order for the setting circles to properly function, the mount needs to be rectified - or aligned.
That means, the RA shaft (or, more precisely, hour shaft) has to be paralel to Earth's rotational axis. Or, it has to point to SCP (South Celestial Pole), a point around which all the stars appear to be circling in 23h 56'.
This can be accomplished by using the polar scope that your mount has (you have to remove the covers to expose it first).
You can find some basics about spherical astronomy here:
http://www.physics.csbsju.edu/astro/CS/CSintro.html
The website is a bit northcentric, but you just have to substitute North with South and the rotation of the celestial sphere will be of course in oposite direction.
Also, you can try here:
http://en.wikipedia.org/wiki/Spherical_astronomy