In general, it is possible to create recursive "anchor"s (AnchorSide) or AutoSize.
And, those can lead to the described behaviour.
They should be detected, and raise an exception (before the range error occurs).
I have not tested your example, but according to what you say, IMHO this should be reported as a bug.
I am not sure where your example has a circle....
But, I find it strange (and suspicious) that the Form is alBottom. IMHO that makes no sense for a form (I guess you may create it with another form as parent (using it like a TFrame?)
alBottom may affect how the form calculates its "preferred widths". And with that AnchorSides and AutoSize of child controls come into play...
But no idea how all that affects your case....