OK, now I understand what the concern is about. Sorry, I've been a bit slow in realising the point at issue.
If z lies on the imag axis, and z(w + 1) = w - 1, then the locus of w is the unit circle with
only the intersection with the real axis at -1 missing, whether you do the problem geometricaly or algebraically.
The 'error' arising from the geometric approach is that you have transformed the problem from z(w + 1) = w - 1 to arg (w - 1) - arg(w + 1) = +/- pi / 2, which is a valid transformation for all cases except z = 0, as arg 0 is undefined. The z = 0 case, which leads to w = 1, must be taken separately, and its result added into the locus.
So, the geometric approach should be:
Case 1: z = ki, k <> 0
z = (w - 1) / (w + 1) is purely imag, so arg z = pi / 2 or - pi / 2, so ... working ...
So, the locus of w is the unit circle with both real intercepts missing.
Case 2: z = 0
0 * (w + 1) = w - 1
Hence, w = 1
So, combining the results from the cases, the locus of w is the unit circle with the single point at -1 missing.
When doing a question inolving a transformation, you should always look back to where you started. It is clear that z(w + 1) = w - 1 cannot have w = -1, but any other value of w is possible with an appropriate z. It is like solving an equation like 2log<sub>10</sub>x = log<sub>10</sub>(x + 6). You transform it to x<sup>2</sup> - x - 6 = 0, and solve to get x = -2 or 3, but you still go back to where you started to realise that only x = 3 is valid. Here, the transformation gives two invalid points, but the starting equation shows one of them is, in fact valid, but covered by another case.