Help with sed script?

[Michael ODonnell]

I'm trying to use sed to rewrite lines in a config file that
have a target string 'xyz' in them surrounded by whitespace
and which are NOT commented out with a hash sign and which
may or may not have leading whitespace.  This expression:

   sed -r -e '/^[[:space:]]*[^#].*[[:space:]]+xyz[[:space:]]*/{s/^.*$/REWRITTEN/}'

...mostly works:

   echo 'abc xyz'  | sed -r -e '/^[[:space:]]*[^#].*[[:space:]]+xyz[[:space:]]*/{s/^.*$/REWRITTEN/}'
   REWRITTEN

   echo ' abc xyz' | sed -r -e '/^[[:space:]]*[^#].*[[:space:]]+xyz[[:space:]]*/{s/^.*$/REWRITTEN/}'
   REWRITTEN

   echo '#abc xyz' | sed -r -e '/^[[:space:]]*[^#].*[[:space:]]+xyz[[:space:]]*/{s/^.*$/REWRITTEN/}'
   #abc xyz

...but the part that's gonna make me go postal is that it seems
like *any* leading whitespace makes the entire expression match
even when it really shouldn't:

   echo ' #abc xyz' | sed -r -e '/^[[:space:]]*[^#].*[[:space:]]+xyz[[:space:]]*/{s/^.*$/REWRITTEN/}'
   REWRITTEN

I'm probably missing something obvious but at this point I
could sure use a few whacks with a clue-stick...