Trying to replace connection string settings with Powershell

Continuing from my comment, you really should manipulate XML and JSON not as regular plain-text.

Assuming your (XML) .config files look like this:

<?xml version="1.0" encoding="utf-8"?>
<configuration>
  <connectionStrings>
    <add name="DbConnection" connectionString="USER ID=SomeId;PASSWORD=abc123;DATA SOURCE=(DESCRIPTION=(ADDRESS=(PROTOCOL=tcp)(HOST=servername.mydomain.com)(PORT=1521))(CONNECT_DATA=(SERVICE_NAME=SpecificServiceName)));PERSIST SECURITY INFO=True" providerName="Oracle.ManagedDataAccess.Client" />
  </connectionStrings>
</configuration>

and your .json files are like this:

{
    "configuration": {
        "connectionStrings": {
            "add": {
                "name": "DbConnection",
                "connectionString": "USER ID=SomeId;PASSWORD=abc123;DATA SOURCE=(DESCRIPTION=(ADDRESS=(PROTOCOL=tcp)(HOST=servername.mydomain.com)(PORT=1521))(CONNECT_DATA=(SERVICE_NAME=SpecificServiceName)));PERSIST SECURITY INFO=True",
                "providerName": "Oracle.ManagedDataAccess.Client"
            }
        }
    }
}

Without those Read-Host lines in the code (I think you should do all the user questions BEFORE entering the code), here's how I would do it:

$folderPath          = 'D:\Inetpub\websites'
$exportCSVPath       = 'D:\somewhere\UpdateResults.csv'
$wordToSearch        = 'SpecificServiceName'
$newConnectionString = 'USER ID=myNewUserId;PASSWORD=newPassword;DATA SOURCE=(DESCRIPTION_LIST = (LOAD_BALANCE = off)(FAILOVER = on)(DESCRIPTION =(CONNECT_TIMEOUT = 5)(TRANSPORT_CONNECT_TIMEOUT = 3)(RETRY_COUNT = 3)(ADDRESS_LIST =(LOAD_BALANCE = on)(ADDRESS = (PROTOCOL = TCP)(HOST = primaryserver.domain.com)(PORT = 1521)))(CONNECT_DATA =(SERVICE_NAME = SERVICENAME_SVC)))(DESCRIPTION =(CONNECT_TIMEOUT = 5)(TRANSPORT_CONNECT_TIMEOUT = 3)(RETRY_COUNT = 3)(ADDRESS_LIST =(LOAD_BALANCE = on)(ADDRESS = (PROTOCOL = TCP)(HOST = drserver.domain.com)(PORT = 1521)))(CONNECT_DATA =(SERVICE_NAME = SERVICENAME_SVC))));PERSIST SECURITY INFO=True" providerName="Oracle.ManagedDataAccess.Client"'

# get a list of the files
$configFiles = Get-ChildItem -Path $folderPath -Include ('*.config', '*.json') -File -Recurse

$result = foreach ($file in $configFiles) {
    # do NOT use Write-Output because that will mess up the $result
    Write-Host "Processing file '$($file.FullName)'"

    # create a flag to track if the file is updated or not
    $updated = $false
    # prepare an object for the CSV
    $objOut = [PsCustomObject]@{
                  File    = $file.FullName
                  Updated = $updated
                  Status  = $null
              }

    # what filetype?
    if ($file.Extension -eq '.json') {
        try {
            $json = (Get-Content -Path $file.FullName -Raw) | ConvertFrom-Json -ErrorAction Stop
            $json.configuration.connectionStrings.add | Where-Object { $_.connectionString -like "*$wordToSearch*" } | ForEach-Object {
                $_.connectionString = $newConnectionString
                $updated = $true
            }
            if ($updated) { 
                $json | ConvertTo-Json -Depth 99 | Set-Content -Path $file.FullName -Force   # Depth 99 for safety..
            }
            # fill the output objects details
            $objOut.Updated = $updated
            $objOut.Status  = 'OK'
        }
        catch {
            # set the error in the output object
            $objOut.Status  = "Error: $($_.Exception.Message)"
        }
    }
    else {  
        # assume XML
        try {
            $xml = [System.Xml.XmlDocument]::new()
            $xml.Load($file.FullName)
            $xml.DocumentElement.connectionStrings.add | Where-Object { $_.connectionString -like "*$wordToSearch*" } | ForEach-Object {
                $_.connectionString = $newConnectionString
                $updated = $true
            }
            if ($updated) { 
                $xml.Save($file.FullName) 
            }
            # fill the output objects details
            $objOut.Updated = $updated
            $objOut.Status  = 'OK'
        }
        catch {
            # set the error in the output object
            $objOut.Status  = "Error: $($_.Exception.Message)"
        }
    }
    # output the object so it gets collected in variable $result
    $objOut
}

# output on screen
$result

# save the results as CSV file
$result | Export-Csv -Path $exportCSVPath -NoTypeInformation

Needless to say that you should try this on a copy of the contents of the D:\Inetpub\websites folder first!

P.S. PowerShell creates valid JSON, but the format is quite ugly. If you want to prettify that, you can use the function I posted earlier Format-Json

Using your example JSON, change this part in the if ($file.Extension -eq '.json') {..} block

 $json.configuration.connectionStrings.add | Where-Object { $_.connectionString -like "*$wordToSearch*" } | ForEach-Object {
    $_.connectionString = $newConnectionString
    $updated = $true
}

into

$json.connectionStrings | Where-Object { $_.DbConnection -like "*$wordToSearch*" } | ForEach-Object {
    $_.DbConnection = $newConnectionString
    $updated = $true
}

In case you cannot rely on the element's name being DbConnection, you can use this loop instead:

# get the actual element name and value, filter the values that pass the comparison
$json.connectionStrings.PsObject.Properties | Where-Object { $_.Value -like "*$wordToSearch*" } | ForEach-Object {
    $json.connectionStrings.$($_.Name) = $newConnectionString
    $updated = $true
}