Given the lack of difficulty of the other questions (and this being pre-internet, targeted for an intern), I don't think the interviewer can have been expecting too much sophistication.
The other obvious way do do it, only requiring the same minimal realization that this is about triangles (with radius as hypotenuse) is to use r^2 = x^2 + y^2 and iterate x=0..r deriving y. You could do it without sqrt if they stipulated that.
So yes, start at (R, 0), increment the y-coordinate each time and possibly decrement the x-coordinate, until x=y which will be at 45°. If the circle's center is an integer on the pixel grid, you can reflect/translate each pixel in that first octant to all eight as you go. If the center is fractionally positioned, you'd have to calculate it all the way around, iterating primarily on y or x depending on the location.
Yes, although the problem statement doesn't say if they care. In this case they are only giving a draw_pixel() primitive, but if you had draw_line() then you could use that to avoid gaps.
The other thing is that this is 90's era, with a CGA display (640x200) being mentioned in the previous question, so I'm not sure there's enough resolution to draw a real circle without gaps unless you do resort to some hack to ensure there aren't any!