Python 3.5, 72
==========
    def f(a,b):b=[*b];return"".join(y==b[0]and b.pop(0)or"#"for y in a if b)
    
Ungolfed:

    def f(a, b):
        b = [*b] #Convert string to list; yeah Python 3.5
        c = []
        for y in a:
           if b and y==b[0]:
              c.append(b.pop(0))
           else:
              c.append("#")
        return "".join(c)

Try it [here][1]


  [1]: https://repl.it/CO1y/1