This paper presents further research on the SNUGL pseudolite-based navigation system presented in this journal in 2003. This system has centimetre-level accuracy, but has an error source arising from right-hand circularly polarized (RHCP) transmissions, unlike outdoor Global Positioning System (GPS). The GPS satellites and pseudolites use RHCP signals, and the polarization affects carrier-phase measurements according to the Line-of-Sight (LOS) vectors from transmitters to receivers. The RHCP error is eliminated by a double differencing process in outdoor GPS, but the error remains in the pseudolite-based system because the LOS vectors from transmitters to a reference and user receivers are different for the close transmitter constellations. This paper shows the RHCP effect on the pseudolite-based navigation system through simulations and experiments. It then shows the RHCP-compensation method improves the measurement and position accuracy by over 10%.