Were trying to point out that since we do not have your tables or data we cannot tell you why the case is evaluating to N
Before running your update,
Run a version of the query as a select statement.
Are the data elements in your query evaluating as you suspect?
Is T2.Application ID Not Null? Is ServerName Not Null?
and does TB Billed This Month Not equal 0?
,[TB Billed This Month]
,CASE WHEN T2.[Application ID] IS NOT NULL AND T2.[ServerName] IS NOT NULL AND [TB Billed This Month] <> 0 THEN 'Y' ELSE 'N' END
FROM TableName1 T1
LEFT JOIN TableName2 T2 ON (T1.[Application ID] = T2.[Application ID]
AND T1.[ServerName] = T2.[ServerName]) WHERE T2.[Data Period] = 'September 2012'