Steve's code is almost right :)
The problem is in line 5
line.replace('.','')
The problem with that is that it doesn't store the new string in the variable automatically, so just add a line =
in front of that and it should be fine:
file1 = open('words.txt', 'r')
file2 = open('output.txt', 'w')
file1_cont = file1.readlines()
for line in file1_cont:
line = line.replace('.', ' ')
file2.write(line)
Hope that helps :)