First off, thank you for using the code-tags. Yours didn't work because you can enter them either all caps ("CODE") or all small ("code"), but not mixed case. I changed that for you.

Regarding your problem: The loop would cover the case when your file1 would contain several lines and you use grep to single out ONE OR SEVERAL of them and replace any occurrence in file two with one after the other. Lets do an example:

File 1

Code:

use first
use second
ignore third
use fourth
ignore fifth

File 2

Code:

this is target and this
line also contains target (2)
and some more lines follow here where
target (3) is mentioned and so on
with target (4).

Program:

Code:

grep "use" file1 | while read source ; do
       print - "now replacing \"target\" with \"$source\""
       sed 's/target/'"$source"'/' file2 > file2.tmp
       mv file2.tmp file2
done

When you only execute the "grep 'use' file1" you will see that it filters out all the lines starting with "ignore" and only displays the one with "use". The variable "source" will be given each of these lines as a content successively at every single execution of the loop:

1) set variable source to "use first"
2) execute "sed '/target/use first/' file2 > file2.tmp"
3) execute mv file2.tmp file2
4) set variable source to "use second"
5) execute "sed '/target/use second/' file2 > file2.tmp"
6) execute mv file2.tmp file2
7) set variable source to "use fourth"
8) execute "sed '/target/use fourth/' file2 > file2.tmp"
9) execute mv file2.tmp file2
...and so on

As you can see all the occurrences of "target" will be changed to "use first" in step 2. Step 5, step 8, etc. will have nothing to do at all.

Therefore the only sensible reasoning for your problem is that "file1" contains only one line from the beginning (that is: only one line which is matched by the grep). In this case you don't need to loop at all (because a loop which is executed only once anyway is unnecessary) and therefore you could rewrite your script like this:

Code:

source="$(grep 'XXX' /path/to/file1)"
sed 's/target/'"$source"'/g' /path/to/file2 > /path/to/file2.tmp
mv /path/to/file2.tmp /path/to/file2

or, even shorter:

Code:

sed 's/target/'"$(grep 'XXX' /path/to/file1)"'/g' /path/to/file2 > /path/to/file2.tmp
mv /path/to/file2.tmp /path/to/file2

I hope this helps.

bakunin