Beginner needs help, too much yarn between needles!
 

I've knitted a scarf using chunky yarn and size 17 needles and did not have this problem. Now I'm trying to knit a baby hat on circular needles (size 8) and once I get all my stitches casted on and begin to knit, the more stitches I knit, the longer the yarn gets between my two needles. By the end of the first row, I've got 2-3 inches of yarn between my two needles and it keeps getting tangled up with the yarn pulled from the ball. I am beyond frustrated, as I've tried different methods of casting on, making sure I'm tightening the yarn after I pull a stitch off, and holding the yarn different ways. Nothing works. I still wind up with that huge amount of yarn between the needles that just keeps growing as I knit. I might add, this also happens when I use regular size 8 needles.

I'm using the right size needles and yarn for my project, I just don't know how to fix it!

Also, when using circular needles, what do you do with the slip-knot cast on when you get to the end of the round?

Your needles might be too long for a baby hat. When I join in the round, I co 1 extra st and knit it together with the first CO st. The backward loop CO is not really suited as the foundation CO, especially on circular needles. Try long tail, knit or cable.