Dear Kousika,
Sorry for the long silence. I was on holiday, and then it took some time to try some approaches.
I can confirm that the spin-up excitation is very hard to converge, both the electronic system and the ionic positions. However, I managed to converge the structure with the spin-up excitation using VASP 6.6.0, with the improved ALGO=ALL and ISEARCH=1. Note that I did an initial static calculation without dipole corrections and started the relaxation from that WAVECAR.
Even for that, I had to struggle a bit. First, I changed a couple of INCAR flags:
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EDIFF=1E-6
NELM=120
LDIPOL=.True.
IDIPOL=1
The dipole tags, we already discussed. I tightened EDIFF, because the forces will be more accurate, and you are less likely to run into problematic ionic configurations. NELM is needed especially for the first step, which will not converge in the (default) 60 steps. This is a very bad start, and you should not continue with a calculation where the first ionic movement is based on wrong force data.
Even then, I ran into problems after 3 ionic steps were completed, and I encountered a bug. However, restarting from the CONTCAR fixed the issue, and the simulation ran for another 150 steps before I stopped it. I should probably have limited this to around 90 steps, at which point the energy changes were consistently below 1E-4. Additionally, you might want to allow for WAVECAR writing, since it will speed up the next step when you restart from WAVECAR. Of course you can also let this run. It will eventually converge, but your force criterion is tight, and POTIM=0.1 will take many steps.
I stopped here, but if you have a WAVECAR, it would be prudent to restart from it, and switch to a different ionic structure optimizer:
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IBRION=1
POTIM=0.5
ISIF=3
LATTICE_CONSTRAINTS=.FALSE. .TRUE. .FALSE.
This should allow for a quicker descent into the probably shallow minimum and allow the excitation to change the cell size in the direction along the nanowire (which is probably not needed. You could keep ISIF=2 and not set LATTICE_CONSTRAINTS).
Let me know how you fare with this in 6.2.
For your other questions:
For me, it looks like when the defect state (especially the excited state) is far away from the bulk band edges, convergence is achieved. Whereas, when the excited defect state is near the band edge (CBM), the convergence is a problem. Is it because of the orbital reordering issue when too many bands are close by?
I think the problem is more likely that you force a much higher excitation in the spin-up state (bit more than 3eV instead of 1.75 or so). So the system is forced to be in a more unstable state.
Also, can I circumvent this convergence problem if I exclude the atoms that correspond to CBM using selective dynamics? Is this a reasonable approach?
I don't think that you will fix the issues with convergence that way. And it is not trivial to figure out the ions that contribute to the CBM I guess.
However, fixing some parts of the nanowire, especially far from your defect, may improve ionic convergence once the electronic system is stable and forces are correct.
Cheers, and again my apologies for the delay,
Michael