UNIX for Dummies Questions & Answers

Guru,
I try to make a loop of 2 files,
Input
File1.txt:

Code:

1
2

File2.txt:

Code:

A
B
C

A, B and C is a file name, inside A

Code:

X
Y
Z

Expected Output
A.1

Code:

X
1
Z

A.2

Code:

X
2
Y

B.1

Code:

X
1
Z

B.2

Code:

X
2
Z

My script is :

Code:

while read lineA; do 
  while read lineB; do
    sed '2d' $lineB  | awk 'NR==2{print $lineA}1' > $lineB.$lineA
  done < File2.txt
done < File1.txt

However, what I got is
A.1

Code:

X
Z
Z

A.2

Code:

X
Z
Z

Any help regarding my error ?

what is the logic?

Inside File 1.txt is a line for input
Inside file File2.txt, is a name of Files ( File A, File B, File C)

Logic is to insert every line File1.txt, into File A, B, C by replacing line 2 . Each of this process will be save into 1 fileoutput.txt (total output 6 files, File A.1, B.1, C.1, A.2, B.2, C.2)
File2.txt contain list of File A,B,C