Help with sed script?

[Michael ODonnell]

Hmmmm.  I'd heard that sed's RE parser is a type known as
"greedy" meaning that every expression matches the longest
possible string in the input.  I therefore can't understand
how after all the leading whitespace has been matched there
can be any whitespace "left over" to match the not-a-hashmark
expression, but apparently there is.  Anyway, changing that part
to be not-a-hashmark-or-whitespace seems to solve the problem:

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

My thanks to all for the feedback.