I's and J's are the center point of an arc. So when you say that it is cutting a circle, i figure it's supposed to do this. Arc commands(G02 and G03) are stated in either incremental mode or absolute mode, it is usually easy to spot this by the relative size of the I & J values compared to the X & Y endpoints.
G02 and G03 commands can also be called with R values on some controls. I don't know what Mach3 uses. I suggest you find out for yourself and make sure that sheetcam is creating the correct output. If you have the option to change arc output in sheetcam - change it to the settings that work for Mach3 - someone else who uses sheetcam and mach3 probably have a better answer then this.
There is one other thing that can sometimes fix problems, it involves setting your code generating system to only output arcs in quarters - that is if an arc is more then 90 Degrees then it will be programed in two or more segments...