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

sed 's/$S00/$S01/g' pb206.cnt > tmp

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

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?

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)

actually i have to replace the whole string S00 with S01

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

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