Two Problems in understanding the algorithm for computing shortest paths in undirected graphs with possibly negative edge weights
An answer to the second problem:

Problem: Each circuit in $S$ must have total weight zero. Why?

Proof: By contradiction.
Suppose that some circuit $C$ in $S$ have nonzero total weight.
Because $G$ has no negative cycles, $C$ has positive total weight.
Note that $C$ does not contain $s$ or $t$. Therefore, the edges of $C$ are all $5$-edge gadgets; see step 2.
Then we can construct another perfert matching on $C$ whose total weight is zero by choosing the middle edge with weight $0$ of each $5$-edge gadgets and the edges between $v$ and $v'$ (for each $v$ in $C$; see step 1) also with weight $0$.
This contradicts the assumption that $M$ is a minimum perfect matching.