Issue with the Connect Line Tool

[micheus]

Tutorial Step 2. With the contour area still active, press L for Loop. Then with the edge loop selected, circularize by 100%. You can also save a flatten step by using the flatten option while circularize is active. Look at your status bar to find the appropriate keystroke to enable it.

Our step 2. With the inset/extrude area still alive, press L for loop. Then with the edge loop selected use the Circularize command [LMB]...

you don't need to change the second part of the process - it's OK for the way it is.

My query: Now with this step, in the right click menu, when you hover over the circularize command it says in the information line [L: Flatten, Equalize and Inflate selected edge loops too make them circular]. I choose the [LMB] Option, then on the right hand side there is a toggle "Flatten/Don't Flatten".

I make it display "Flatten", I then hit tab set 'Diametric Factor' = 0, 'Circularize = 100%'. If I am doing this correctly this does not match the tutorial image and instead has more diagonal lines, this also deselects all of the edges.

It's only a misconception about the operation. If you hit [1] and see the text "Flatten" in right hand side it's because you choose the "Don't Flatten" option (that's the active one).
The nice thing about the preview actions in Wings3D is that by switching between them just hitting [1] many times you should be able to see the different result.

You also can play with actions - moving or dragging the mouse - and cancel the action by hitting [ESC] - It's the way you run try/error process and learn how the command works or what you can do using its options/variations.

Tutorial Step 3. Then press shift-L to select the region inside the loop. Then dissolve the faces. Now move it outward by a little bit.

Our Step 3. For the step which you read "Now move it outward by a little bit." you can use move normal command that will move the face forward in this case, since it's a flat face.

the "Our Step 3" is not replacing all the "Tutorial Step 3" - only the last part of the text. It was a suggestion. You could use move along an axis in case it become aligned with one of three axis; or you could use move along axis with the [RMB] for pick the axis to move the face along; ...

Don't be afraid to test the commands options, even getting wrong results. You always can cancel it ([ESC]) or if finish it you still can use Undo [CTRL+Z] for switch between current state and previous one or [CTRL+ALT+Z] to undo many steps back.