Basically what you want to do is a Cross Tab query or a Pivot.

Here's a couple of links

http://www.sqlservercentral.com/articles/T-SQL/63681/

http://technet.microsoft.com/en-us/library/ms177410(v=sql.105).aspx

So a crosstab example for your query would be

SELECT a.StudentID,

MAX(CASE WHEN Reader# = 1 THEN a.UserID END) Reader1,

MAX(CASE WHEN Reader# = 1 THEN Decision END) Decision1,

MAX(CASE WHEN Reader# = 2 THEN a.UserID END) Reader2,

MAX(CASE WHEN Reader# = 2 THEN Decision END) Decision2

FROM StudentReaderTable a

INNER JOIN DecisionTable b ON a.StudentID = b.StudentID and a.UserID = b.UserID

GROUP BY a.StudentID

You'll notice that student 123 has the second set of columns populated rather than the first as the decision is for reader# 2