I've also found a reference (http://hsa.brown.edu/~maicar/Circe.html) that suggests she may have lived on a mountain named Circaeum, which looked like an island since it was surrounded by marshes and sea. I don't have time to rewrite this article tonight, I'll give it a shot soon though if nobody else does.
In the version I read, it was presented as an island. But perhaps it was just a poor translation. --KQ