Here's an option on how to do it.
You might want to check the following articles to understand what's happening in the code and to get the function used.
http://www.sqlservercentral.com/articles/String+Manipulation/94365/
http://www.sqlservercentral.com/articles/comma+separated+list/71700/

SELECT k.ID,
  k.Keys,
  ( SELECT CASE WHEN s.Matched = 1 THEN CHAR( s.Item + 64) ELSE s.Item END
    FROM @Keys i
    CROSS APPLY dbo.PatternSplitCM(i.Keys, '%[0-9]%') s
    WHERE k.ID = i.ID
    ORDER BY s.ItemNumber
    FOR XML PATH(''), TYPE).value('./text()[1]', 'varchar(max)') AS NewKeys
FROM @Keys k
GROUP BY k.ID,
  k.Keys;