I have read the documentation on it. I guess I tend to believe the examples more than the documentation (probably why I am frustrated so often as I have found them lacking at times). If you look at the section "E. Using OUTPUT INTO with from_table_name in an UPDATE statement"

The following example updates the ScrapReasonID column in the WorkOrder table for all

work orders with a specified ProductID and ScrapReasonID. The OUTPUT INTO clause returns values

from the table being updated (WorkOrder) and also from the __Product table__ (emphasis mine). ...

USE AdventureWorks2012;

GO

DECLARE @MyTestVar table (

OldScrapReasonID int NOT NULL,

NewScrapReasonID int NOT NULL,

WorkOrderID int NOT NULL,

ProductID int NOT NULL,

ProductName nvarchar(50)NOT NULL);

UPDATE Production.WorkOrder

SET ScrapReasonID = 4

OUTPUT deleted.ScrapReasonID,

inserted.ScrapReasonID,

inserted.WorkOrderID,

inserted.ProductID,

p.Name -- <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

INTO @MyTestVar

FROM Production.WorkOrder AS wo

INNER JOIN Production.Product AS p

ON wo.ProductID = p.ProductID

AND wo.ScrapReasonID= 16

AND p.ProductID = 733;

SELECT OldScrapReasonID, NewScrapReasonID, WorkOrderID,

ProductID, ProductName

FROM @MyTestVar;

GO

Anyway, enough time wasted on trying to get this to work.

Thanks for the feedback.