Just a few code corrections:

open (INFILE, "input.txt") or die "cannot open input: $!";
open (OUTFILE, ">output.txt") or die "cannot open output: $!";

while (<INFILE>) {   # note the < and > brackets

   s/foo/bar/sg;     # no =~ needed for $_
                     # no m needed

   print OUTFILE;    # no "$_\n" needed: $_ is automatic
                     # and the \n is still in $_ (you
                     # don't cho(m)p it...
      
}

close INFILE;
close OUTFILE;
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If you need to replace a multi-line string, you might try setting $/ to undef (slurp the whole file) or "" (read in paragraphs), and maybe adding a /s modifier to the replacement regex.

I'd recommend reading:

perldoc -f open
perldoc perlvar (look for the $/ entry)
perldoc perlre (for info about regular expressions)
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Update: added or die, and close parts, trying not to set a bad example :-)

-- 
Joost       downtime n. The period during which a system
            is error-free and immune from user input.
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