Set-Content appends a newline (line break, CRLF) at the end of my file

tl;dr (PSv5+; see bottom for older versions):

(Get-Content webtemp.config) -replace 'database=myDb;', 'database=newDb;' -join "`n" |  Set-Content -NoNewline -Force web1.config

^{Note: Replace "`n" with "`r`n" if you want Windows-style CRLF line endings rather than Unix-style LF-only line endings (PowerShell and many utilities can handle both).}

In PSv5+, Set-Content supports the -NoNewline switch, which instructs Set-Content not to add a newline (line break) after each input object. The same applies analogously to the Add-Content and Out-File cmdlets.

In other words: Set-Content -NoNewline directly concatenates the string representations of all its input objects:

PS> 'one', 'two' | Set-Content -NoNewline tmp.txt; Get-Content tmp.txtonetwo

If what you're passing to Set-Content -NoNewline is a single string that already has embedded newlines, you can use it as-is and get the desired result:

PS> "one`ntwo" | Set-Content -NoNewline tmp.txt; "$(Get-Content -Raw tmp.txt)?"onetwo?

Note that Get-Content -Raw reads the file as a whole, as-is (aside from character decoding) and the fact that the ? appears directly after two implies that the file has no trailing newline.

In your case, since you're processing input lines one by one (via Get-Content without -Raw) and therefore outputting an array of lines (strings), you must first join them with a newline as the separator - between lines only - and pass the result to Set-Content -NoNewline, as shown at the top; here's a simplified example:

PS> ('one', 'two') -join "`n" | Set-Content -NoNewline tmp.txt; "$(Get-Content -Raw tmp.txt)?"onetwo?

'one', 'two' is a two-element string array that is a stand-in for your line-by-line processing command.

Encoding note:

In Windows PowerShell, Set-Content produces "ANSI"-encoded files by default, based on your system's legacy, single-byte code page.
To control the encoding explicitly, use the -Encoding parameter.

In PSv4-, a solution that uses the .NET Framework is needed:

PS> [System.IO.File]::WriteAllText('tmp.txt', ('one', 'two') -join "`n"); "$(Get-Content -Raw tmp.txt)?"onetwo?

Note that [System.IO.File]::WriteAllText(), in the absence of an encoding argument, defaults to BOM-less UTF-8.
Pass the desired [System.Text.Encoding] encoding instance as the 3rd argument as needed.

I never noticed this, so i did a quick search and found:

set-content adds newlines by default

The suggested solution is to encode your content to bytes and then use Set-Content with the -Encoding parameter.

Set-Content test.txt ([byte[]][char[]] "test") -Encoding Byte

I tested it myself so i can confirm that this works.

I see that's an xml file. This way doesn't add a newline.

[xml]$xml = get-content web1.config$xml.configuration.appSettings.add.value =   $xml.configuration.appSettings.add.value -replace 'database=myDb;',  'database=newDb;'$xml.save("$pwd\web1.config")  # in case of .net weirdness