We examine the dynamics of two-dimensional colloidal systems using numerical simulations of a system with a drive applied to a thin region in the middle of the sample to produce a local shear. For a monodisperse colloidal assembly, we find a well defined decoupling transition separating a regime of elastic motion from a plastic phase where the particles in the driven region break away or decouple from the particles in the bulk, producing a shear band. For a bidisperse assembly, we find that the onset of a bulk disordering transition coincides with the broadening of the shear band. We identify several distinct dynamical regimes that are correlated with features in the velocity-force curves. As a function of bidispersity, the decoupling force shows a nonmonotonic behavior associated with features in the noise fluctuations, power spectra, and bulk velocity profiles. When pinning is added in the bulk, we find that the shear band regions can become more localized, causing a decoupling of the driven particles from the bulk particles. For a system with thermal noise and no pinning, the shear band region becomes more extended and the average velocity of the driven particles drops at the thermal disordering transition of the bulk system.