Nice. The example seems to be tokenized one. Anyway, can be misleading. 
Simply replace the <attributeGroud> with <complexType>. This seems to work 
for me.

<xs:schema
 xmlns:xs="http://www.w3.org/2001/XMLSchema"
 elementFormDefault="qualified"
>

<xs:complexType name="A">
  <xs:attribute name="x"/>
  <xs:attribute name="y"/>
 </xs:complexType>

<xs:complexType name="B">
  <xs:complexContent>
   <xs:restriction base="A">
    <xs:attribute name="x" use="required" />
    <xs:attribute name="y" use="prohibited"/>
   </xs:restriction>
  </xs:complexContent>
 </xs:complexType>

<xs:element name='a' type='B'/>

</xs:schema>

"Mahalax" <Mahalax@d...> wrote in message 
news:2E16A199-7E18-4CA8-999F-FCE336D365C8@m......
> Here is the link:
>
> http://msdn.microsoft.com/library/default.asp?url=/library/en-us/xmlsdk/html/xsdrefattributeelement.asp
>
> "Han" wrote:
>
>> Interesting example. As I read MSDN, only the name of a complexType is
>> allowed.
>>
>> (Excerpt)
>>
>> restriction (complexContent)
>>
>> base
>> The name of a complexType element defined in this schema (or another 
>> schema
>> indicated by the specified namespace). The element containing the
>> restriction element is derived from the type specified by the base value.
>>
>> http://msdn.microsoft.com/library/default.asp?url=/library/en-us/xmlsdk/html/xsdrefrestrictioncomplexContentElement.asp
>>
>> Do you happened to have a link of the example?
>>
>> "Mahalax" <Mahalax@d...> wrote in message
>> news:796D6E29-A336-48B7-92B9-CA8C6F73F8CD@m......
>> > Yes, it does. Here is the MSDN sample.
>> >
>> > <xs:attributeGroup name="A">
>> >  <xs:attribute name="x" type="xs:NCName"/>
>> >  <xs:attribute name="y" type="xs:QName"/>
>> > </xs:attributeGroup>
>> >
>> > <xs:complexType name="B">
>> >  <xs:complexContent>
>> >   <xs:restriction base="xs:A">
>> >    <xs:attribute name="x" use="required" />
>> >    <xs:attribute name="y" use="prohibited"/>
>> >   </xs:restriction>
>> >  </xs:complexContent>
>> > </xs:complexType>
>> >
>> > -Maha
>> >
>> > "Han" wrote:
>> >
>> >> I mean reuse. I mean @use attribute at reused attributeGroup.
>> >> By the way, does MSDN example use name of an attributeGroup for its 
>> >> @base
>> >> attribute?
>> >>
>> >> "Mahalax" <Mahalax@d...> wrote in message
>> >> news:CE54F817-01C7-487C-B277-F8245F2E0531@m......
>> >> > Hi Han,
>> >> >
>> >> > Actually I am trying to explore the attributegroup and its purpose.
>> >> > Many
>> >> > of
>> >> > my schemas have a set of common atributes which I am trying to 
>> >> > declare
>> >> > commonly and reuse as required. The code I have posted is an 
>> >> > adaptation
>> >> > from
>> >> > MSDN which is not working.
>> >> >
>> >> > "Han" wrote:
>> >> >
>> >> >> OOPS, I mean @use by @required in the earlier post. Values are,
>> >> >>
>> >> >> optional, prohibited, required
>> >> >>
>> >> >> "Mahalax" <Mahalax@d...> wrote in message
>> >> >> news:207B477E-4686-4015-8CFE-A510B3AEBE6B@m......
>> >> >> > Greetings.
>> >> >> >
>> >> >> > Below is the schema snippet I am trying to explore 
>> >> >> > attributegroups
>> >> >> > and
>> >> >> > attribute's use property. However I am getting a validation error
>> >> >> > saying
>> >> >> > "undefined value for base encountered", pointing to
>> >> >> > <xs:restriction>.
>> >> >> > Please
>> >> >> > help.
>> >> >> >
>> >> >> > <?xml version="1.0" encoding="UTF-8"?>
>> >> >> > <xs:schema elementFormDefault="qualified"
>> >> >> > attributeFormDefault="unqualified"
>> >> >> > xmlns:xs="http://www.w3.org/2001/XMLSchema">
>> >> >> > <xs:attributeGroup name="grp">
>> >> >> > <xs:attribute name="x" type="xs:string"/>
>> >> >> > <xs:attribute name="y" type="xs:string"/>
>> >> >> > <xs:attribute name="z" type="xs:string"/>
>> >> >> > </xs:attributeGroup>
>> >> >> > <xs:complexType name="A">
>> >> >> > <xs:complexContent>
>> >> >> > <xs:restriction base="xs:grp">
>> >> >> > <xs:attribute name="x" use="required"/>
>> >> >> > <xs:attribute name="y" use="prohibited"/>
>> >> >> > <xs:attribute name="z" use="required"/>
>> >> >> > </xs:restriction>
>> >> >> > </xs:complexContent>
>> >> >> > </xs:complexType>
>> >> >> > </xs:schema>
>> >> >> >
>> >> >> > Best Regards,
>> >> >> > Mahalakshmi Natarajan
>> >> >> > http://mahalax.blogspot.com
>> >> >> > http://dotnetjunkies.com/weblog/mahalax
>> >> >>
>> >> >>
>> >>
>> >>
>>
>>