DECLARE @Heads AS TABLE([Id] INT ,[Hash] VARCHAR(50))
INSERT INTO @Heads
    SELECT Dups.[Id],Dups.[Hash]
    FROM
    (
        SELECT MIN([Id]) AS [Id],[Hash] AS [Hash]
        FROM [dbo].[Inventory]
        WHERE [Hash] <> ''                          -- Exclude items w/no hash (never parent or dup)
        AND ([Lvl]=0 OR([Lvl] =1 AND [FileCat]=1 )) -- Constrain to L1 or StoreLevel emails
        GROUP BY [Hash] HAVING Count([Hash])>1
    )Dups

UPDATE [dbo].[Inventory] SET [Filter]=3 WHERE [FamilyPid] IN
(
    SELECT i.[Id] FROM [Inventory] i INNER JOIN @Heads h ON i.[Hash] = h.[Hash] AND i.[Id] <> h.[Id]
)