I have a file that contains blocks of text such as:

<stuff>
<number="false">
<name>jonno</name>
<filename>/home/john/file</filename>
<options>male</options>
</stuff>

However this file contains many of these with only minor differences...eg:


<stuff>
<number="false">
<name>jonno</name>
<filename>/home/john/file</filename>
<options>male</options>
</stuff>

<stuff>
<number="true">
<name>mary</name>
<filename>/home/mary/file</filename>
<options>male</options>
</stuff>

I'm wanting to selectively remove one of these blocks of text from the file and save it permanently. Can this be done with SED?

No. I don't think so. sed is a line editor, it reads on a line-per-line basis.
You're better of with either awk or a Perl script, in my humble opinion.

I don't really mind how it gets done (perl/awk/grep/sed) - any tips on how to do it in perl/awk?

In Perl, your algo could be something like:
-open file for reading
-open up 2 files for writing: 1 to save the blocks you want to keep, 1 for the others
-allocate an array that you're going to use as a buffer
-loop over all lines in the file you're reading
-if line =~ <stuff>, you're at the beginning of a new block.
In such case, you need to check if you want to keep the block you've just read and
print it to the right output file.
-else, you need to simply append the line you've read to your buffer.
-after the loop, close all files

Once the script has done it's work, check out it's two output files. If the file that contains
the blocks you want to keep seems OK to you, mv it over the original file.