You can't use a variable in the FROM clause.

However if this is for something like masking data on restores to dev/test, and isn't run often, you can use dynamic-SQL

declare @cmd varchar(max)

declare @table1 varchar(200)

select @table1 = 'table1'

select @cmd = ' select column1, substring (column1,1,2) + '

+ 'LEFT(REPLICATE(replace(newid(),''-'',''''),1+LEN(column1)/32),LEN(column1)-2) '

+ 'from schema1.' + @table1

+ 'where len(column1) > 30'

Note that you can also make variables for the column and schema.