Пожалуйста, попробуйте это ....
Declare @tbl as Table(ID int Identity(1,1),lName varchar(max),fName varchar(max),IsD bit default(0))
Insert into @tbl(lName,fName)values('XYZ','PQR'),('XYZ','PQR'),('XYZ','HHH'),('XYZ','HHH'),('P','o'),('P','o')
update s
Set
S.IsD =1
from @tbl S Inner Join
(Select MIN(ID) ID,fName,lName from @tbl group by fName ,lName having count(*) > 1) M
on S.fName = M.fName and S.lName = s.lName
Where S.ID != M.ID
Select * from @tbl