Removing extra blank space from PowerShell output - powershell

Question

I have a PowerShell program to replace some strings with another from an input file but the output file has an extra space/line when compared to input file.
$InputACKFile = 'C:\Testing_Newline\Aj*.dat'
Write-Host "Found " ($InputACKFile | Measure-Object).Count " files to process"
$InputACKFile = Get-ChildItem $InputACKFile
foreach ($xfile in $InputACKFile) {
Write-Host "Processing file: $xFile`r"
#((Get-Content $xfile).Replace("~", "`n")) | Out-File $xfile.FullName
[System.IO.File]::ReadAllText($xfile).Replace("~","`n") |
Set-Content $xfile
$flag = 0
(Get-Content $xfile | ForEach {
if ($_ -match "^PQ\*") {
$_ -replace "test1", "test2"
} elseif ($_ -match "^TA\*") {
$_ -replace "test1", "test2"
} elseif ($_ -match "^ABC\*RS\*") {
$_ = '';
$flag = 1
} elseif ($_ -match "^(DE\*)([0-9]+)(\*[0-9]+)$" -and $flag -eq 1) {
$_ -replace ($matches[2]), ([int]::Parse($matches[2])-1);
$flag = 0
} else{
$_
}
}) | Out-File $xfile.FullName -Encoding Ascii
((Get-Content $xfile) -join("~")) | Set-Content $xfile.FullName
}