combine 2 files with updated sequence number using awk command

You could try the following:

awk 'FNR==1 {if (NR>1) next; print;} \
     /^D/ {seq++; sid=sprintf("SEQ%07d",seq); sub(/SEQ[0-9]+/,sid); print} \
     END {printf("T%05d\n",seq);}' file1.txt file2.txt

This will

• skip the first line of all files but the first, whose first line is printed "as is"
• for all lines starting with D, increase a sequence counter seq, replace the existing sequence with the new sequence id, and print the line.

At end-of-file, it will print the total from the last value of seq.

This solution should also work for more than 2 files.

With GNU awk for the 3rd arg to match() if you want to print the new sequence number in the same width of 0-padded string as the existing input:

$ cat tst.awk
NR==1 && FNR==1 { print }
FNR > 2 { printf "%s%0*d%s\n", prev[1], length(prev[2]), ++seqNr, prev[3] }
{ match($0,/([^1-9]+)([0-9]+)(.*)/,prev) }
END { printf "%s%0*d\n", prev[1], length(prev[2]), seqNr }

$ awk -f tst.awk file1 file2
H20200428
DSEQ0000001USA
DSEQ0000002MEXICO
DSEQ0000003BRAZIL
DSEQ0000004USA
DSEQ0000005MEXICO
DSEQ0000006BRAZIL
T00006

which with any awk (and keeping the array prev[] instead of using scalars for comparison with the gawk script) would be:

$ cat tst.awk
NR==1 && FNR==1 { print }
FNR > 2 { printf "%s%0*d%s\n", prev[1], lgth2, ++seqNr, prev[3] }
{
    match($0,/[^1-9]+/)
    prev[1] = substr($0,RSTART,RLENGTH)
    match($0,/[^1-9]+[0-9]+/)
    lgth2 = RLENGTH - length(prev[1])
    prev[3] = substr($0,RSTART+RLENGTH)
}
END { printf "%s%0*d\n", prev[1], lgth2, seqNr }

$ awk -f tst.awk file1 file2
H20200428
DSEQ0000001USA
DSEQ0000002MEXICO
DSEQ0000003BRAZIL
DSEQ0000004USA
DSEQ0000005MEXICO
DSEQ0000006BRAZIL
T00006

or if you want to just retain the same number of leading zeros then with GNU awk:

$ cat tst.awk
NR==1 && FNR==1 { print }
FNR > 2 { print prev[1] (++seqNr) prev[2] }
{ match($0,/([^1-9]+)[0-9]+(.*)/,prev) }
END { print prev[1] seqNr }

$ awk -f tst.awk file1 file2
H20200428
DSEQ0000001USA
DSEQ0000002MEXICO
DSEQ0000003BRAZIL
DSEQ0000004USA
DSEQ0000005MEXICO
DSEQ0000006BRAZIL
T00006

and with any awk:

$ cat tst.awk
NR==1 && FNR==1 { print }
FNR > 2 { print prev[1] (++seqNr) prev[2] }
{
    match($0,/[^1-9]+/)
    prev[1] = substr($0,RSTART,RLENGTH)
    sub(/[^0-9]+[0-9]+/,"")
    prev[2] = $0
}
END { print prev[1] seqNr }

$ awk -f tst.awk file1 file2
H20200428
DSEQ0000001USA
DSEQ0000002MEXICO
DSEQ0000003BRAZIL
DSEQ0000004USA
DSEQ0000005MEXICO
DSEQ0000006BRAZIL
T00006