To add to what pietlinden stated and perhaps explain the concern is that looping in t-sql is horrible from a performance perspective. When you have nested cursors you also have an excruciatingly slow process. Most of the time these queries or processes can be redesigned in a set based approach.
BTW, excellent job posting a sample table and data!!!
If you can explain clearly what you expect for output I would be happy to help you find a set based solution to this.
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