It seems there may be some ambiguity in the requirements (and that occurs all too often) I assumed "occurrence of the characters" really meant the string supplied by the first argument. Example: replace all occurrences "Hello" with "Hello World". When the length of the string in the 2nd argunment is different than that in the 1st argument that means the size of the result string may be different than its original size by either shorting or lengthing the text read from the file.

what text file are you using for your tests? Did your instructor give you one or did you make up your own ? If you can make up your own I would use a text file that you may already have lying around on your computer. That yway you can have something like this

c.exe Hello Worlds file.txt

instead of just nonsense characters.