  We present a detailed analysis of the Aharonov-Bohm (AB) interference
oscillations manifested through transmission of an electron in a mesoscopic
ring with a magnetic impurity atom inserted in one of its arms. The spin
polarization transport is also studied. The electron interacts with the
impurity through the exchange interaction leading to exchange spin-flip
scattering. Transmission in the spin-flipped and spin-unflipped channels are
explicitly calculated. We show that the entanglement between electron and
spin-flipper states lead to a reduction of AB oscillations in spite of absence
of any inelastic scattering. The spin-conductance (related to spin-polarized
transmission coefficient) is asymmetric in the flux reversal as opposed to the
two probe conductance which is symmetric under flux reversal. We point out
certain limitations of this model in regard to the general notion of dephasing
in quantum mechanics.
