The circle is the stress state and the line is the strength. Failure is not a stress level, it is the moment the circle grows out to touch the line.
Pore pressure slides the circle to the left without changing its size. That is why a saturated soil can fail under a total stress that the same soil carries safely when drained.
In a drained test the total and effective circles are the same one. In an undrained test the gap between them is exactly u.
The failure plane sits at 45 + φ/2 from the plane σ1 acts on, because that is the point where the circle first touches the envelope, at 2θ = 90 + φ.
With φu = 0 the undrained strength ignores the cell pressure, so every UU circle has the same radius cu and the deviator at failure is always 2cu.