The method for treating the evolution of the density matrix developed in the accompanying paper for many-spin systems is applied here for calculating magnetic resonance signals of a spin A interacting with a bath of N identical spins B. Spins B are assumed to have much smaller gyromagnetic ratios than the spin A (e.g., the former are nuclear spins, I and the latter is an electron spin, S). The experimentally observed quadratic dependence of the spin-echo envelope decay on concentration and time is explained from considering the dipolar coupling of spin A to all the B spins in the presence of B-B dipolar interactions. It is shown that the spin-echo envelope decay in the rigid limit is due to the interaction of the A spin with the coherent many-body states of the coupled spins B via the nuclear flip-flop terms I+/-I-/+ which becomes a dissipative mechanism in the thermodynamic limit. This represents a more rigorous analysis than simplified models based on an incoherent version of "spin diffusion," and it leads to good quantitative agreement with experiment. Moreover, this analysis represents a unified description of both the modulation and decay of the A-spin echoes. Spin echoes and line shapes for the A-B-N systems are also calculated for finite motions which randomize the B spins. Even for very slow motions (modeled as translational diffusion) an effective mechanism for spin-echo envelope decay is generated, which readily overtakes the coherent mechanism in importance. The intensity distribution for the forbidden components in the A-spin line shape resulting from multiquantum transitions of the B spins caused by the pseudosecular interaction terms SzI+/-, is calculated. In the rigid limit it is found to behave like a Poisson distribution.