No need for row by row, wash your mouth out! 🙂 Just use an INNER JOIN on both fields for the update (run this first).

UPDATE t

Set field1 = s.field1, field2 = s.field2

FROM SourceTable S

JOIN TargetTable T on S.Key1 = T.Key1 and S.Key2 = T.Key2

Then use a LEFT JOIN on both the fields to check for non-existent records in the target table (target PK field will be NULL) so that you know which records to INSERT.

INSERT TargetTable(Field1, Field2)

SELECT S.Field1, S.Field2

From SourceTable S

Left Join TargetTable on S.Key1 = TargetTable.Key1 and S.Key2 = TargetTable.Key2

Where TargetTable.Key1 Is Null

All this code is untested, but hopefully you get the idea.