Strip spaces after single capital letters with sed

This takes care of names like A B Chadwick and A B C D'Souza

Text such as A B cde and A B CDE are not modified.

It uses two temporary null characters \x00 to mark changes (per name) as it progress through a line, removing spaces.

:N and :S are branch-to labels (any name will do)
t and b are branching instructions.
t branches upon a successful replacemnt in the previous s/../../ command.
b branches unconditionally.

sed -r ":N                                                # loop per name
         /(\<[A-Z]\> )+[A-Z][a-z']/{                      # line needs action
             s/((\<[A-Z]\> )+)([A-Z][a-z'])/\x00\1\x00\3/ # add \x00 markers
            :S                                            # loop per space
             s/(\x00[A-Z]+) (\<[A-Z]\>)/\1\2/             # delete a space
             t S                                          # any more spaces? 
             b N                                          # any more names?
         }; s/\x00//g"                                    # remove \x00

It's tricky with sed, but if perl is okay you can do it this way

echo O S D Settings | perl -p -e 's/(\b[A-Z]) (?=.([^\w]|$))/$1/g'

This is hard in sed because it does not support look-ahead assertions.

Tests:

echo O S D | perl -p -e 's/(\b[A-Z]) (?=.([^\w]|$))/$1/g'
echo O S D Settings | perl -p -e 's/(\b[A-Z]) (?=.([^\w]|$))/$1/g'
echo O S D. | perl -p -e 's/(\b[A-Z]) (?=.([^\w]|$))/$1/g'
echo One O DDE T. S Asdf Q R Tee | perl -p -e 's/(\b[A-Z]) (?=.([^\w]|$))/$1/g'
echo O S D\  | perl -p -e 's/([A-Z]) (?=.([^\w]|$))/$1/g'

If you want a sloppy solution with sed, try

echo O S D Settings | sed -e 's/ \([A-Z]\) \([A-Z] \)/\1\2/g'

Which works for your sample, but will fail for other cases.

Tests:

echo O S D | sed -e 's/ \([A-Z]\) \([A-Z] \)/\1\2/g'
echo O S D Settings | sed -e 's/ \([A-Z]\) \([A-Z] \)/\1\2/g'
echo O S D. | sed -e 's/ \([A-Z]\) \([A-Z] \)/\1\2/g'
echo One O DDE T. S Asdf Q R Tee | sed -e 's/ \([A-Z]\) \([A-Z] \)/\1\2/g'
echo O S D\  | sed -e 's/ \([A-Z]\) \([A-Z] \)/\1\2/g'

This might work for you:

echo "O S D Settings and B T W and A B C D'Souza too F Y I" |
sed ':a;s/\(\<[[:upper:]]\>\) \(\<[[:upper:]]\>\([^'\'']\|$\)\)/\1\n\2/g;ta;s/\n//g'
OSD Settings and BTW and ABC D'Souza too FYI

Explanation:

Use a character that does not exist in the original string to replace the spaces you want deleting, then delete that chosen character throughout the string. \n is a good candidate as it cannot exist normally because it is used by sed as line delimiter.