The ship's compass to the right of the scanner points towards the currently allocated docking pad and navigation target. The indicator will be smaller if the target is behind you.
The radar is a tool: you can use it poorly if you misinterpret it and use it well if you read it correctly. It can also be affected by various effects (overcrowded space, erratic ship movement, signature strength). You also have to actually look at it. In my opinion there is game play is this system, though I understand you might not like that game play.
For me, it's about trying to find the balance between giving players what they want (empowerment), what they need (challenge), and what they expect (plausibility); and a very subjective balance it is too
A point in case: the "quick glance" to some peripheral element – like the sensors disc – is abhorrent to some, fine to others, and unrealistic HUD to a different group (with various mixes of opinion for good measure).
So why do we have it? Well, we want to keep the main bracket view clean. We want folk to use the sensor disc (that's why we have it ) and, just as importantly, we think that this little glance down is often the precursor to exciting game play, as it creates the opportunity for you to lose your position on your target's tail. What's more, this chance is more or less based on player skill and player choice – you decide how much you want to rely on the sensors.
I'm sure that, give the choice, everyone would prefer to have perfect information and instant response when posed with a challenge, to maximise their chance of success. This kind of flies in the face of games design though; in this case, I feel the imperfection of the system presents an interesting game play challenge that has an associated player skill range (aniticpation of the targets manoeuvres, the ability to quickly interpret sensor action, including the vagueness inherent in it).
The scanner is the circle in the centre of your console (bottom centre of your screen.
Objects are shown as a vertical stick with either a triangle or square at the end of them. The other end shows where the object is on the horizontal plane of your ship and their length shows how far above or below you they are. The scanner is logarithmic by default (so a distance at the edge of the scanner represents further than the same distance at the centre). You can change this in the functions on the right hand panel.