in a bash shell I have the following

S00="BLOCK-NAMES /ELM1 /SAUT0 /FIT00 FOR ELMT,SAMPLE,FIT"
S01="BLOCK-NAMES /ELM1 /SAUT0 /FIT01 FOR ELMT,SAMPLE,FIT"

sed "s/'$S00'/'$S00'/g" pb206.cnt > tmp

sed commplains and says
sed: -e expression #1, char 29: Unknown option to `s'

Can anybody help?
Thank you!!!

Try this
instead of

Thank you Shivdatta, it doesn't complain anymore but it does not replace the string!

You are replacing a string with the same string, so it's quite possible that it's replacing it, but there is no way to tell.

What exactly would you expect the result to be like?

If in case u are trying to replace FIT00 by FIT01 then if this helps

sed 's/\(.*\)FIT00\(.*\)/\1FIT01\2/g' filename

of course the strings are different:
here is the script

S00="BLOCK-NAMES /ELM1 /SAUT0 /FIT00"
S01="BLOCK-NAMES /ELM1 /SAUT0 /FIT01"
S02="BLOCK-NAMES /ELM1 /SAUT0 /FIT02"
S03="BLOCK-NAMES /ELM1 /SAUT0 /FIT03"

sed 's/$S00/$S01/g' pb206.cnt > tmp1
sed 's/$S00/$S02/g' pb206.cnt > tmp2
sed 's/$S00/$S03/g' pb206.cnt > tmp3

but tmp1, tmp2 and tmp3 are the same as pb206.cnt (which contains S00)

Shivdatta: Actually you probably mean

Your expression will replace only one occurrence (the last I believe) because of the wildcards which make it match the whole line.

But I guess what's asked for is really

Single quotes force the strings to be taken literally; no quotes will give you a syntax error for many complex strings. To interpolate a variable into a string, put it in double quotes.

Of course, if you meant the substitution to contain literal single quotes, put them back in.

The "unknown option to s" error happens because the interpolated string contains slashes. Sed has no way to know which slashes were interpolated (this happens in the shell, before sed executes) so you need to use a different separator than the slash. (Fortunately in this case you know there are no percent signs in these variables. It's tougher when you can't know in advance whether or not a particular character could be included in a variable.)