That behavior is pretty normal for a small dog. Some dogs even require a short walk before they are able to defecate. Many dogs will spend 10 minutes finding the perfect spot to defecate and other will spend minutes circling to find the perfect spot. There is even some studies out there that indicate dogs may align themselves north to south when defecating.
As for diarrhea, it is not unusual for a dog to experience occasional diarrhea. It can be caused by an unusual treat, parasites like worms, a protozoan infection like giardia or coccidian or even stress. Some anxious dogs experience diarrhea on a regular basis and it can be linked to IBS (irritable bowel syndrome).
If your dog is only experiencing diarrhea every once in a while, I wouldn’t be too concerned. You can add a teaspoon of canned pumpkin (not pie filling) or Metamucil to the food which will help keep the feces pliable but absorb excess fluid in the bowels eliminating diarrhea.
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Since there have been recalls on certain foods, please check the following site to be sure the food your animals eat is not affected. If it is affected, contact your vet as soon as possible. Have your dog seen if they have any symptoms.