Help requested for a script with sed

Hello Folks,
I would very much appreciate if I could get help/suggestions on a particular sed usage. I have to write a script to take version info from a version file, compute the image name, print error if the image does not exist.
The version file looks like below:

"

#
# version.cfg
#
version =   4.2.1.1.10  # 
"

The script seems to get the image name right but does not expand correctly in "ifeq ($(wildcard $(IMAGE_FILE)), )"

This is what I get:
"
IMAGE_FILE = ./images/release-4.2.1.1.10.tar.gz 
Makefile:19: *** No image file "./images"/release-`grep version ./version.cfg | grep "=" | cut -d'=' -f2 | sed -e 's/#.*//' -e 's/[ ^   ]*//' -e 's/\ .*//'`.tar.gz.  Stop.
"

This is my script:
==================
"
.PHONY: chkImage
VERSION_FILE := ./version.cfg
ifeq ($(wildcard $(VERSION_FILE)),)
    $(error $(nl-ht)No Version File $(VERSION_FILE) Exists) 
endif
ImageRoot := "./images"
Version := `grep version $(VERSION_FILE) | grep "=" | cut -d'=' -f2 |   \
                    sed -e 's/\#.*//' -e 's/[ ^ ]*//' -e 's/\ .*//'`
Image := release-$(Version).tar.gz
IMAGE_FILE := $(ImageRoot)/$(Image)

all: chkImage

chkImage:
        @printf "IMAGE_FILE = $(IMAGE_FILE) \n"
ifeq ($(wildcard $(IMAGE_FILE)), )
    $(error $(nl-ht)No image file $(IMAGE_FILE))
endif
"

Your help in resolving this issue would be greatly appreciated.

If you want help with sed, please post only the sed part and the input to sed and the expected or wanted output.

Version := `grep version $(VERSION_FILE) | grep "=" | cut -d'=' -f2 | \
sed -e 's/\#.//' -e 's/[ ^ ]//' -e 's/\ .*//'`
Image := release-$(Version).tar.gz
IMAGE_FILE := $(ImageRoot)/$(Image)

The variable IMAGE_FILE does not seem to expand when I do:

$(error No image file $(IMAGE_FILE))

I get:
"No image file "./images"/release-`grep version ./version.cfg | grep "=" | cut -d'=' -f2 | sed -e 's/#.//' -e 's/[ ^ ]//' -e 's/\ .*//'`.tar.gz"

What should I do to effect immediate expansion?

Thanks.

wouldn't your use of single-quotes make them literal strings?

try to use double-quotes around your sed -e scripts and be sure to escape accordingly for other reg expresssion chars, such as asterisk (ie, sed -e "s/\#.\*//" )