Ray cleaned it up the math a bit and be aware that these calculations are ball park figures for a very complicated subject. Even though this information may work or seem resonable in some cases you need to approach the subject carefully and even aquire the help of a Marine Architect before applying into one of your designs. The diameter of a propeller is the diameter of the circle swept by the tips of the blades.
Diameter is the single most important factor in propeller calculations.
A slight change in diameter has more effect on power absorbtion than a considerable change in pitch or blade area. The most common error is to install a propeller of too large a diameter for the power available. Like a screw turning into a piece of wood, the pitch of a propeller is the distance it will advance in one revolution through the water, assuming there is no slippage. There are two kinds of slip. Apparent slip is the difference between the advance observed and that calculated by pitch times revolutions.