First and foremost you should pick up a good C++ book and read the concepts:   
The Definitive C++ book and guide list
To get you started little brief about your Questions:
Your first example is an example of Composition not Inheritance.
Inheritance is IS A relationship.
Composition is HAS A relationship.   
In the example, Circle IS A type of Shape.    
class circle: shape 
is same as:    
class circle: private shape 
For a class, Default Access specifier is Private by default. This is Private Inheritance. Class circle privately derives from class shape.  
In Private Inheritance all the public and protected members of the Base class become Private members of the Derived class.
class circle: public shape 
Is Public Inheritance, Class circle publically derives from class shape.  
In Public Inheritance the public members of Base class become Public members of Derived class and protected members of the Base class become Protected members of the Derived class.
This C++-Faq should be a good read for understanding the basics:
What are access specifiers? Should I inherit with private, protected or public?
But when you make a function a friend isn't that the same thing as making it public?
When you make a function as friend of an class, Access specifiers no longer apply to that function. That function can access, protected as well as private members of that class.But this is only limited to that function.
what does the keyword virtual mean/do/used for?
The keyword virtual is used to implement Dynamic/Run-Time Polymorphism.
It is an broad term to be explained as such, So it is upmost important that you read and understand the concept from an book. If you still face problems in understanding anything specific about it,Come back here and feel free to ask an Specific Question here.