Stuck on this union / except
transaction_id(pk)  decision_id(pk)   accepted_ind
A                    1                NULL
A                    2                <blank>
A                    4                Y
B                    1                <blank>
B                    2                Y
C                    1                Y
D                    1                N
D                    2                O
D                    3                Y

SELECT Transaction_id, Decision_ID, Accepted_id
FROM MyTable t
WHERE Accepted_ind = 'Y'
OR (NOT EXISTS (SELECT 1 FROM MyTable t2
                WHERE Accepted_ind = 'Y'
                and t2.Transaction_id = t.transaction_id)
    AND Decision_id = 1)

DECLARE @t TABLE (
    transaction_id NCHAR(1),
    decision_id INT,
    accepted_ind NCHAR(1) NULL
)

INSERT @t VALUES
    ( 'A' , 1 , NULL ),
    ( 'A' , 2 , '' ),
    ( 'A' , 4 , 'Y' ),
    ( 'B' , 1 , '' ),
    ( 'B' , 2 , 'N' ),  -- change from your sample data
    ( 'C' , 1 , 'Y' ),
    ( 'D' , 1 , 'N' ),
    ( 'D' , 2 , 'O' ),
    ( 'D' , 3 , 'Y' )

SELECT transaction_id, decision_id, accepted_ind FROM (
SELECT transaction_id, decision_id, accepted_ind,
    ROW_NUMBER() OVER (
        PARTITION BY transaction_id
        ORDER BY
            CASE
                WHEN accepted_ind = 'Y' THEN 1
                WHEN decision_id = 1 THEN 2
                ELSE 3
            END
    ) rn
FROM @t
) Raw
WHERE rn = 1

transaction_id decision_id accepted_ind
-------------- ----------- ------------
A              4           Y
B              1
C              1           Y
D              3           Y

SELECT CASE
         WHEN accepteddecision.transaction_id IS NOT NULL THEN
         accepteddecision.transaction_id
         ELSE firstdecision.transaction_id
       END AS transaction_id,
       CASE
         WHEN accepteddecision.decision_id IS NOT NULL THEN
         accepteddecision.decision_id
         ELSE firstdecision.decision_id
       END AS decision_id,
       CASE
         WHEN accepteddecision.accepted_ind IS NOT NULL THEN
         accepteddecision.accepted_ind
         ELSE firstdecision.accepted_ind
       END AS accepted_ind
FROM   decision
       LEFT OUTER JOIN (SELECT *
                        FROM   decision AS accepteddecision
                        WHERE  accepteddecision.accepted_ind = 'Y') AS
                       accepteddecision
         ON accepteddecision.transaction_id = decision.transaction_id
       LEFT OUTER JOIN (SELECT *
                        FROM   decision AS firstdecision
                        WHERE  firstdecision.decision_id = 1) AS firstdecision
         ON firstdecision.transaction_id = decision.transaction_id
GROUP  BY accepteddecision.transaction_id,
          firstdecision.transaction_id,
          accepteddecision.decision_id,
          firstdecision.decision_id,
          accepteddecision.accepted_ind,
          firstdecision.accepted_ind

WITH T AS (SELECT * FROM (
              VALUES ('A', 1, NULL),
                     ('A', 2, ''),
                     ('A', 4, 'Y'),
                     ('B', 1, ''),
                     ('B', 2, 'Y'),
                     ('C', 1, 'Y'),
                     ('D', 1, 'N'),
                     ('D', 2, 'O'),
                     ('D', 3, 'Y'),
                     ('E', 2, 'O'), -- smaple data extended
                     ('E', 1, 'N')  -- smaple data extended
             ) AS T (transaction_id, decision_id, accepted_ind)
     )
SELECT *
  FROM T
 WHERE accepted_ind = 'Y'
UNION
SELECT T.*
  FROM (
        SELECT transaction_id
          FROM T
         WHERE decision_id = 1
        EXCEPT
        SELECT transaction_id
          FROM T
         WHERE accepted_ind = 'Y'
       ) D
       JOIN T
          ON T.transaction_id = D.transaction_id
             AND T.decision_id = 1;