We study a one dimensional quantum XY spin chain driven by a local noisy spin impurity with finite correlation time, along the transverse field direction. We recover the celebrated Zeno crossover and we show that entanglement can be used as a proxy for the heating and strong-measurement regimes. We compute the entanglement entropy of a block of spins and we observe that its velocity spreading decreases at strong dissipation, as a result of the Zeno effect. Upon increasing the correlation time of the noise, the location of the Zeno crossover shifts at stronger dissipation rates opening up a broader heating phase. We offer insight on the mechanisms underlying the dynamics of the entanglement entropy by monitoring different time traces of the local transverse magnetisation profile. Our results aim at starting a complementary viewpoint on the field of dissipative quantum impurities, based on a theoretical quantum information perspective.