That seems a little disconnected.
If all you want to do is change entry in second file to "YES" from "NO" sed would be a good way to go. There is no commonality between file1 and file 2 on which to determine what to change the entry to. Does each file in fact only contain one record as in your example? If not then that lack of commonality means there's no automated way to do what you want.
If each file only has one record then you could do it by doing something testing the value of both files for the answer to LOG_OUT: and use that as the basis for what you do:
Code:
LO_FILE1=$(grep LOG_OUT file1 |awk -F: '{print $2}')
sed -e s/LOG_OUT:NO/LOG_OUT:$LO_FILE1/ -e s/LOG_OUT:YES /LOG_OUT:$LO_FILE1/ file2
The first line gets the value following LOG_OUT: from file1.
The second line substitutes that value from file1 in file2 regardless of whether current values is YES or NO in file2. (You could refine the script by actually testing for the current value and only substituting if it were different but the above is a quick and dirty way that would work.)