ILL 1966 Problem 16

We are given a circle $K$ with center $S$ and radius $1$ and a square $Q$ with center $M$ and side $2$. Let $XY$ be the hypotenuse of an isosceles right triangle $XY Z$. Describe the locus of points $Z$ as $X$ varies along $K$ and $Y$ varies along the boundary of $Q.$