It is not clear to me from the diagram and the explanation as to what is failing. Is it possible for you to give a sample schema/data for me to work through it?
Looking at the diagram if you do query between two red circled nodes with numPaths=2 it should return two paths of length 7 and 9. Circular walks are removed because they are not paths in strictest terms of the word. (See definitions on Wikipedia)
Happy to work with you on this if you could provide more information on schema and data.
Cheers!