Pencil tool in illustrator update is not working properly

I am using an oval shape and tryint to use the pencil too to change the shape - 
With the same shape selected - one time it fills the pencil part but does not change the shape - then a few strokes later it adds the pencil line only - at one point it deleted points that outlined the shape.

Example 3 shows what happened when added the pencil stroke from the stroke of the shape - it cut it into 2 parts.    

All of this started with latest update.   I made all suggested changes to the preferences and it didn't fix the problem.  I als drew from the path which also didn't work.