This version of the problem is no simpler than the generic version, in the sense that the generic problem can, by a distance-preserving change of coordinates (translation plus orthogonal transformation), be changed into this one.
You can further simplify, by allowing scaling up or down uniformly, to the case where the circle is the unit circle in the $xy$-plane.
In that case, it's probably easiest to write the squared distance between a point $C$ of the circle, $C = (x, y, 0)$ with $x^2 + y^2 = 1$ and a point $S(t) = P + td$ of the line (where $P$ is a point on the line, and $d$ is a direction vector) and minimize that.
Let's look at that second problem. Instead of thinking of $C$ as being on the circle, let it be any point in space. What's the closest point $Q$ on the line that contains $P$ and has unit-vector direction-vector $d$? Answer: it's the one where $C-Q$ is perpendicular to $d$, so writing $Q = P + td$, we get
$$
[(P + td) - C] \cdot d = 0
$$
which you can solve to get
$$
t = \frac{(C-P) \cdot d}{d \cdot d}
$$
which is just $(C-P) \cdot d$, because $d$ is a unit vector. So we can say
$$
F(C) = P + ((C-P) \cdot d)d
$$
is the point of the line closest to $C$. Note that this is linear in the coordinates of $C$.
Now restrict to points $(x, y)$ of the unit circle, parameterized, if you like, by $(\cos s, \sin s$. Then $F( (\cos s, \sin s) ) = L + M \cos s + N \sin s$ for some constant points/vectors $L, M, N$ that you are welcome to work out. You can compute the squared distance from this to $(\cos s, \sin s)$, which is then a quadratic in the cosine and sine. Take the derivative with respect to $s$ and set it to zero and solve, and you have found both the closest and farthest points.
In certain special cases (like the $z$-axis, passing through the middle of the unit circle in the xy plane, the coefficients $M$ and $N$ will both be zero vectors, so the quadratic will be a constant...this corresponds to all points on that circle being equidistant from the line.
This squared distance is
$$
U(C, t) = \|(P-C) + td\|^2
$$
The expression on the right, for a fixed $C$, is a quadratic in $t$ and has two solutions; with a little dancing around some special cases (like the line defined by $x = y = 0$, where there isn't a "point of the circle closest to the line", because all points are equally distance) you can actually pick the $t$ that gives the smaller squared-distance. (Every "raytracer" in computer graphics does this, but with a sphere instead of a circle). And from this $t$, you can find the closest point.
So now you have a function that takes an arbitrary point $C$ and produces the coordinates of the closest point on $L$.