Step 1: Rewrite the given equation.
The given differential equation is:
\[
2xy + y^2 - 2x^2 \frac{dy}{dx} = 0.
\]
Rearrange this equation to express \( \frac{dy}{dx} \) explicitly:
\[
\frac{dy}{dx} = \frac{2xy + y^2}{2x^2}.
\]
Step 2: Separate the variables.
To separate variables, we first divide through by \( x^2 \) and \( y \) (assuming \( y \neq 0 \)):
\[
\frac{1}{y} \, dy = \frac{2x + y}{2x^3} \, dx.
\]
Step 3: Simplify the right-hand side.
We now rewrite the right-hand side of the equation:
\[
\frac{2x + y}{2x^3} = \frac{2x}{2x^3} + \frac{y}{2x^3} = \frac{1}{x^2} + \frac{y}{2x^3}.
\]
Thus, the equation becomes:
\[
\frac{1}{y} \, dy = \left( \frac{1}{x^2} + \frac{y}{2x^3} \right) \, dx.
\]
Step 4: Integrate both sides.
We integrate the left-hand side:
\[
\int \frac{1}{y} \, dy = \ln |y|.
\]
For the right-hand side, we integrate term by term:
- The first term is:
\[
\int \frac{1}{x^2} \, dx = -\frac{1}{x}.
\]
- The second term is:
\[
\int \frac{y}{2x^3} \, dx = \frac{y}{2} \int x^{-3} \, dx = \frac{y}{2} \cdot \frac{1}{2x^2} = \frac{y}{4x^2}.
\]
Thus, the equation becomes:
\[
\ln |y| = -\frac{1}{x} + \frac{y}{4x^2} + C,
\]
where \( C \) is the constant of integration.
Step 5: Apply the initial condition.
Substitute the given initial condition \( x = 1 \) and \( y = 2 \) into the equation:
\[
\ln |2| = -\frac{1}{1} + \frac{2}{4 \times 1^2} + C.
\]
Simplify:
\[
\ln 2 = -1 + \frac{1}{2} + C \quad \Rightarrow \quad \ln 2 = -\frac{1}{2} + C \quad \Rightarrow \quad C = \ln 2 + \frac{1}{2}.
\]
Step 6: Substitute the value of \( C \).
Substitute the value of \( C \) back into the general solution:
\[
\ln |y| = -\frac{1}{x} + \frac{y}{4x^2} + \ln 2 + \frac{1}{2}.
\]
Conclusion:
The particular solution to the differential equation is:
\[
\boxed{\ln |y| = -\frac{1}{x} + \frac{y}{4x^2} + \ln 2 + \frac{1}{2}}.
\]