Figured it out... I was joining on the wrong column in the CTE...

-- courses without prereqs

WITH PrereqsCTE (CourseID, Depth) AS

(

--- Anchor: courses without prerequisites

SELECT c.CourseID, 0 AS Lvl

FROM Course c

WHERE NOT EXISTS (SELECT * FROM Prereq WHERE NextCourseID = c.CourseID)

UNION ALL

-- Recursive member: courses that have other courses as prerequisites.

SELECT p.NextCourseID, Depth + 1

FROM Prereq p INNER JOIN PrereqsCTE

ON p.ReqCourseID = PrereqsCTE.CourseID

)

SELECT CourseID, Depth

FROM PrereqsCTE;