We has a session where we were facing a werewolf. As a werewolf they have the scent ability. Our magic user then managed to blind the werewolf which lead us into the realm of rules bickering and confusion.
So we quickly figured out that it could use a move action to locate the direction of a creature, and if within 5 feet is able to pinpoint it regardless of vision. So it knew creatures adjacent to it and could find more.
The issue started with provoking attacks of AOO and flanking. According to the blind condition, nothing is mentioned about the creature losing the ability to threaten squares around it, thus it is able to grant flanking, benefit from flanking, and take AoO's.
Could someone please confirm that this is true or please show me the rules that prevents this?