I was going to say the same thing

It seems like, based on what you have explained, that sed is doing what it should. It sounds like you want a record looking like this:
Object
dump
00 90 00 00 00 00 ...
00 00 90 90 00 00 ...
trace:
[<sss>]lslsl
[<lsl>]ksksk
Object
dump
00 90 45 23 00 00 ...
00 00 90 90 00 00 ...
trace:
[<sss>]lslsl
[<lsl>]ksksk
Object
dump
00 90 55 44 00 00 ...
00 00 90 90 00 00 ...
trace:
[<sss>]lslsl
[<lsl>]ksksk
To end up looking like this:
00 90 00 00 00 00 ...
00 00 90 90 00 00 ...
00 90 45 23 00 00 ...
00 00 90 90 00 00 ...
00 90 55 44 00 00 ...
00 00 90 90 00 00 ...
To test this, I created a text file (test.txt) with your original example, then used "cat" while piping your sed command. Testing your original command like this:
cat test.txt |sed '/trace/,/dump/d'
did what it seems like you would want it to do, except it left the top two lines of the original file. In order to remove those two lines also, I modified the command to use sed twice like this:
sed '/trace/,/dump/d' | sed '/Object/,/dump/d'
Then it removed everything except for the lines between dump and trace. Is this what you're looking for? If not, please explain more.