Works fine for me:-

    $ cat infile.xml
    1
    <load address=’11c1�����ze=’08′ />
    3
    $ cat seddy.sed
    2s@^.*$@<load address=’11c1385b’ size=’08’ />@
    p
    $ sed -n -f seddy.sed infile.xml
    1
    <load address=’11c1385b’ size=’08’ />
    3
    $

So I'm guessing it's locale related (LC_CTYPE is en_GB.UTF-8 for me), or the string that forms his corrupt line is different from what was pasted. The output of:-

    sed -n '35185222p' infile.xml | hexdump -b

would help in that regard.