As Jeff and Steve have eluded, you don't need a loop to do this. You just need to use a tally table.
Something like this should be close.
update m set mrno = mrno + N
from #mrinf m
join Tally t on t.N >= @prevmrno and t.N <= @newmrno
where comcod = 3305
I would suggest that you change your datatypes to ints instead of varchar so you don't have to continuously wrestle with varchar data and converting/casting back and forth.
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