Glad you're getting closer!
Do you see the difference between your date example and your second example with your curl line?
/lcd "$(date "+%d/%m/%y %T")"
/lcd "curl -s "$line1" | sed -n 's/.*<LocalityName>\(.*\)<\/LocalityName>.*/\1/p'"
The difference is that in your working 'date' example, you're executing the date command inside the parentheses of the $() notation.
In your non-working 'curl' example, you're not _executing_ curl. You're essentially telling it to _display_ that curl command, which might not have the results that you expect.
Try enclosing it in $() like your date example:
/lcd "$(curl -s "$line1" | sed -n 's/.*<LocalityName>\(.*\)<\/LocalityName>.*/\1/p')"
I hope this helps!