In a recent letter [Auzinsh {\it{et. al.}} (physics/0403097)] we have analyzed the noise properties of an idealized atomic magnetometer that utilizes spin squeezing induced by a continuous quantum nondemolition measurement. Such a magnetometer measures spin precession of $N$ atomic spins by detecting optical rotation of far-detuned probe light. Here we consider maximally squeezed probe light, and carry out a detailed derivation of the contribution to the noise in a magnetometric measurement due to the differential AC Stark shift between Zeeman sublevels arising from quantum fluctuations of the probe polarization.