Here's one way to find the groups.  You could also use COUNT and leave off the ELSE clause.

SELECT *, SUM(CASE WHEN FileRowID = '00' THEN 1...

On this small scale test, this solution performs better.  I haven't had a chance to test on a larger scale.

SELECT *, pni.PONUMBER + REPLACE(CHAR(DENSE_RANK() OVER(PARTITION...

You could try a CTE/ROW_NUMBER().  Since you haven't supplied your complete query I can't give you the full details, but it would be something like the following:
;
WITH...

Part of the issue is that you're joining in the wrong order and part is that you need to specify a more complete condition on the join.

[code...

CAST(STUFF([Enc Reading], 7, 0, '.') AS DECIMAL(18,3))

Drew

Updated the query, because you want to insert instead of replacing.

Finding the complement of a set by changing an equal to a not equals in a very simple query appears to be beyond some people.

Drew

I rewrote your query to distinguish between individuals and groups.  I did some simplification that may not be warranted.  Specifically, I removed the cycle check, because you should not have...

The standard way to do this is with a CTE/ROW_NUMBER() combination.  You just have to get the correct order for the row number.

;
WITH CTE AS
(