I agree that the version should be stated in the question.
This works fine in 2000 so long as you create the table defining the column as varchar. To get the correct answer you need to allow the first entry to define the data type
Select 1 col
into Test
union Select 2
union Select 3
union Select 4
union Select 5
union Select 6
union Select 7
union Select 'A'
union Select 'B'
union Select 'C'
union Select 'D'
will produce the desired result and have gotten us all the deserved points