Step 1: Solve the differential equation.
The given differential equation is separable. We can write it in the form:
\[
\frac{dy}{dx} = \frac{x(1 - x^2)^{\frac{1}{2}} - 2xy}{1 - x^2}
\]
After solving, the general solution of the differential equation is:
\[
y = \sqrt{1 - x^2} + c(1 - x^2)
\]
Step 2: Conclusion.
The correct answer is (A) \( y = \sqrt{1 - x^2} + c(1 - x^2) \).