I'm only in my 60's, but I remember how different it was back then, when ethnic jokes were common and prejudices were not examined like they are these days.

It could be that approaching senility has her reverting to habits she learned as a child.

Just a thought.

referred loudly and in his presence to one of the staff members at her care facility as an n-word, a word she would never have spoken when she was well. I apologized to the man she was speaking of, and he smiled and told me that that happens all the time when people begin to lose their minds, that he thought of it in the same way as losing bowel control--unpleasant to deal with, but not intentional on the patient's part.

Kindest person I have ever known. Never a word or action to suggest racist tendencies or unkind thoughts about anyone individually or as a group. Then came dementia and at the end she did the same kind of thing at her nursing home. I’ve often wondered where it came from, I don’t think she could have hidden racists thoughts for 75 years without it coming out once (she lived in the south surrounded by overt racism). Is racism so deeply embedded in us all that even if we never consciously practice it, we are subconsciously fighting it until we no longer have the mental capacity to fight it?

impairment such as Tourette's Syndrome, etc. People affected with these problems suddenly spout vulgarities and other heinous words that it's highly unlikely they even heard before.
I don't understand that part of impairment, but it's there.

After the 1st time, I thot I would ignore it. After the 2nd time, I thot I must say something.
Now I am not sure.
I am reminded of someone who was 90 when she died, and she had some kind of (undiagnosed) cognitive impairment for the last 10 years of her life.
She was also in all ways that I knew her, a great progressive.
One day she had the newspaper spread out on the table to the births page, and she asked me what I saw. It turned out her "point" was that only women with Spanish surnames were giving birth. According to her. Not true of course. I didn't know what to say. By then, she had already exhibited very strange behavior and speech, particular denigrating various people for various attributes. I didn't know her before her mental coming-apart, I think it was not her character, but who knows.. Sad....

She may begin to exhibit paranoid behavior. For example, she may accuse you or other friends of stealing from her, further isolating herself.

She would tell me that my father was stealing from her!
It was terrible, esp. for my father, and sad...

Has lost so much of her inhibitions and filters, saying things to people now that embarrass me. She and I disagree on most everything, btw.

I'm so sorry but I think your friend may have a problem like my mother - her bigotry is now out of the closet.

However, her comment, "don't you like to live among people like you?" rings true. I live among idiot Republicans and I so wish I didn't. It's one of the biggest reasons I enjoy spending time here on DU.