• Check your data:

    SELECT [Status]

    FROM CustomPollerStatus

    WHERE [Status] LIKE '%T%'

    Your @flaglist variable is varchar but you compare it (or rather, a substring of it) to a numeric:
    WHEN SUBSTRING(@flaglist,@flagpos,1)=1 and @counter = 31 THEN 'Graceful Shutdown Issued by Upstream Device, '

    You could change that to a varchar too:
    WHEN SUBSTRING(@flaglist,@flagpos,1) = '1' and @counter = 31 THEN 'Graceful Shutdown Issued by Upstream Device, '

    “Write the query the simplest way. If through testing it becomes clear that the performance is inadequate, consider alternative query forms.” - Gail Shaw

    For fast, accurate and documented assistance in answering your questions, please read this article.
    Understanding and using APPLY, (I) and (II) Paul White
    Hidden RBAR: Triangular Joins / The "Numbers" or "Tally" Table: What it is and how it replaces a loop Jeff Moden