[shell] removing new line character from incoming stream using sed

To remove newlines, use tr:

tr -d '\n'

If you want to replace each newline with a single space:

tr '\n' ' '

The error ba: Event not found is coming from csh, and is due to csh trying to match !ba in your history list. You can escape the ! and write the command:

sed ':a;N;$\!ba;s/\n/ /g'  # Suitable for csh only!!

but sed is the wrong tool for this, and you would be better off using a shell that handles quoted strings more reasonably. That is, stop using csh and start using bash.