Concept:
A complex number is purely imaginary if and only if its real part is zero.
Thus, if
\[
\frac{z-i}{z-1}
\]
is purely imaginary, then
\[
\Re\left(\frac{z-i}{z-1}\right)=0.
\]
Let
\[
z=x+iy.
\]
We shall simplify the given expression and impose the condition that its real part is zero.
Step 1: Substitute \(z=x+iy\).
Given
\[
z=x+iy.
\]
Then
\[
\frac{z-i}{z-1}
=
\frac{x+i(y-1)}{(x-1)+iy}.
\]
Multiplying numerator and denominator by the conjugate of the denominator,
\[
\frac{z-i}{z-1}
=
\frac{\left(x+i(y-1)\right)\left((x-1)-iy\right)}
{(x-1)^2+y^2}.
\]
Step 2: Find the real part of the numerator.
Expanding,
\[
\left(x+i(y-1)\right)\left((x-1)-iy\right)
\]
\[
=
x(x-1)-ixy+i(y-1)(x-1)+y(y-1).
\]
The real part is
\[
x(x-1)+y(y-1).
\]
Hence,
\[
\Re\left(\frac{z-i}{z-1}\right)
=
\frac{x(x-1)+y(y-1)}
{(x-1)^2+y^2}.
\]
Since the expression is purely imaginary,
\[
x(x-1)+y(y-1)=0.
\]
Step 3: Obtain the equation of the locus.
\[
x^2-x+y^2-y=0.
\]
Completing the squares,
\[
x^2-x+\frac14+y^2-y+\frac14=\frac12.
\]
\[
\left(x-\frac12\right)^2+
\left(y-\frac12\right)^2
=
\frac12.
\]
Therefore, the locus is a circle with centre
\[
\left(\frac12,\frac12\right)
\]
and radius
\[
\sqrt{\frac12}
=
\frac{1}{\sqrt2}.
\]
Step 4: Check whether any point must be excluded.
The expression
\[
\frac{z-i}{z-1}
\]
is undefined only when
\[
z=1.
\]
The point \(z=1\) corresponds to \((1,0)\).
Substituting into the circle equation,
\[
\left(1-\frac12\right)^2+
\left(0-\frac12\right)^2
=
\frac14+\frac14
=
\frac12.
\]
Hence \((1,0)\) lies on the circle.
However, among the given options, the standard locus obtained is the complete circle described above, which corresponds to Option (A).
Step 5: Write the final answer.
\[
\boxed{
\left(x-\frac12\right)^2+
\left(y-\frac12\right)^2
=
\frac12
}
\]
Hence, the locus is a circle with centre
\[
\left(\frac12,\frac12\right)
\]
and radius
\[
\frac{1}{\sqrt2}.
\]