1. you can cast a circle with anything! for the first time, I recommend the blessed piece of chalk, so you can see where you're moving. I use musical instruments to purify the space and welcome the elements (in case you're interested in that drums = earth, bells and resonant metal = water, stringed instruments = fire, and wind instruments = air. but that's just what I do, to personalize it a bit more and tailor the music to the elements. a drum or a bell or a flute or a guitar will work for anything.)
2.) location plays a part in your focus, sure. in a cluttered room it's so much harder to focus than it is in a clean one. and even though forests and grassy plains are sacred, the Lord and the Lady are everywhere.
3.) As long as it's comfortable to move around in, and it's a decent amount of space, you don't need to worry.
4.) magic circles are used for a variety of purposes. protection is one reason, but if you aren't working with negative spirits or energies, you probably won't get possessed or anything. another reason is to keep your energies inside the circle. some people cast circles to separate themselves from the mundane world. others do it because it gets them in a ritual state of mind.
your circle casting doesn't even have to be an out-of-the-book method if you want it to be. it can be as elaborate or simple as your heart desires. do what works best for you, and what best suits your purpose.
hope this helps.