I'm having trouble following your statement of the problem. After showing samples of the file data, you said:

If an item from file1 is in-stock, I need to update the field to the left of the size(SM,MD,LG,XL) to zero in file2.

Okay, this seems to mean that if a line in file1 starts with a non-zero value, some corresponding slot in file2 should be set to zero. But then you add "desired output should be:"

128,1,Download,0,,TEXT,2,Size,2,,SM,3,0,MD,4,,LG,5,,XL

But, the only difference between this "desired output" and the sample data for file2 is that a couple zeros in the original record have been removed, leaving empty fields next to the sizes that were apparently "out of stock" in file1.

You didn't say anything above about wanting to delete field contents for "out of stock sizes", and in this example, your stated goal of setting a field to zero looks like a no-op -- the field to the left of "MD" was already zero in the original file2 data, so there should be nothing to do.

What do you really want?