Please check this below one more time ...i give clearly

UPDATE T1 SET [September 2012 Billing File] = CASE WHEN T2.[Application ID] IS NOT NULL AND T2.[ServerName]

IS NOT NULL AND [TB Billed This Month] <> 0 THEN 'Y' ELSE 'N' END

FROM TableName1 T1

LEFT JOIN TableName2 T2 ON (T1.[Application ID] = T2.[Application ID]

AND T1.[ServerName] = T2.[ServerName]) WHERE T2.[Data Period] = 'September 2012'