We propose a model for studying the ionization, photoelectron spectra, and spin polarization of xenon atoms under intense circularly polarized (CP) pulses by solving the time-dependent Schrödinger equation (TDSE) with an effective potential for Xe. The ionization mechanism is mainly due to multiphoton absorption in these strong CP fields. The effective potential of a single active electron for Xe consists of asymptotic Coulomb and parametric screening parts and yields low-lying levels that are comparable to those by other models for the total angular momentum
J
=
3
/
2
of
X
e
+
and new for
J
=
1
/
2
. We show in detail the absorption pathways, above-threshold ionization (ATI) spectra, and spin polarization mechanisms of photoelectrons originated from the initial state
5
p
m
l
of Xe with the magnetic quantum number
m
l
being
−
1
, 0, or 1. There exists a substructure with sub-peaks in each of multiple ATI peaks from
5
p
−
1
due to pulse effects on the valence electron passing through the absorption pathways. ATI and spin polarization results agree qualitatively with experimental data at the focal volume average to include the spatial effect of CP pulses. We also present the spin polarization results of the widely used strong-field approximation model (SFA), which are inconsistent with those of TDSE and experiments. This shows that TDSE is more accurate with more details than SFA for studying spin polarization in strong CP fields.