The problem is that the function 'element' is ambiguous, for the reasons MigMit pointed out.

The standard solution to this problem is to add a dummy argument to fix the type argument to the type function:

data Proxy a = Proxy

class ... => ReplaceOneOf full where
    type Item full ::  *

    -- implementations can just ignore the first argument
    element :: Proxy full -> Item full -> [Item full] -> Bool

    replaceOneOf :: ...
        ...
        | element (Proxy :: Proxy full) x from = ...

Now the choice of which 'element' to use can be determined by the type of the proxy.