The concept you are looking for is called 'RandomAccess' for file reading/writing. Most of the easy-to-use I/O methods in C# are 'SequentialAccess', meaning you read a chunk or a line and move forward to the next.
However, what you want to do is possible, but you need to read some tutorials on file streams. Here is a related SO question. .NET C# - Random access in text files - no easy way?
You are probably either reading the whole file, or reading it line-for-line as part of your search. If your fields are fixed length, you can read a fixed number of bytes, keep track of the Stream.Position
as you read, know how many characters you are going to read and need to replace, and then open the file for writing, move to that exact position in the stream, and write the new value.
It's a bit complex if you are new to streams. If your file is not huge, copying a file line for line can be done pretty efficiently by the System.IO library if coded correctly, so you might just follow your second suggestion which is read the file line-for-line, write it to a new Stream (memory, temp file, whatever), replace the line in question when you get to that value, and when done, replace the original.