$ cat ea.txt
root 1933 1923 localhost calm 32rhewr

$ A=root

$ B=ROOT

$ sed 's/$A/$B/g' ea.txt
root 1933 1923 localhost calm 32rhewr

**No change above

So use double quotes instead of single quote: 

$ sed "s/$A/$B/g" ea.txt
ROOT 1933 1923 localhost calm 32rhewr

So 

LINECHANGE=`sed s/$OLDLINE/$NEWLINE/ $filename`

should be something like this:

LINECHANGE=`sed "s/$OLDLINE/$NEWLINE/" $filename`