Thanks Jeff for the detailed insight on the necessary shift in programmatic perspective, I truly appreciate the help!
Right now I'm taking the training courses offered through CBT Nuggets on 70-461 and I can see that there is a nugget entirely devoted to row-based transactions vs. set-based transactions, so I'm confident I'll shortly have a better understanding of how a T-SQL programmer needs to think relative to relative to relational databases (and set theory, at a higher level).
For a better understanding of what I've been trying to accomplish, I'll post some results below:
Re: The ChestItems table, It's purpose is to be a one-to-many join table between Chests and Items. A chest can have many Items, but an Item can have one Chest:
ChestItemsID ChestID ItemID
------------ ----------- -----------
1 1 60002
2 1 60014
3 1 60015
4 1 60021
5 1 60031
6 1 60038
7 2 60004
8 2 60007
9 2 60012
10 2 60019
The purpose of the WHILE loop around the INSERT was to ensure that I was putting x Items into the same chest. If there is a better method of implementation, please share it with me. I am humbled by the help I've already received and appreciate any more that comes my way.