On a quick read through I noticed your data type is int. This would drop the leading zeros on many of my skus. When I run this with the varchar type I get:

Msg 240, Level 16, State 1, Line 1

Types don't match between the anchor and the recursive part in column "STD SKU" of recursive query "rCTE".

I'll keep working through this but thought I'd throw that out there if you have a quick reply.

Thanks,