Question

Are these statements valid?

UPDATE Table1 
  FROM (SELECT * FROM Table2)  

INSERT INTO Table1 
  (SELECT * FROM Table2)  

Answer 1

Your update statement needs a Set for each field you want to update, so no.
Correct syntax:

UPDATE table1
SET table1.field1=table2.field1, table1.field2=table2.field2 
FROM table1 
INNER JOIN table2 ON table1.keyfield = table2.keyfield

Your insert statement will work provided that Table1 and Table2 have the same columns in the same order.

Edit: If you’re looking for an example of Update/Insert (Upsert), check out this blog post (which works on SQL 2008–not sure about 2005 but doubt it).

Another option is an Update and then an insert. Example from this blog post :

UPDATE CustomersA
   SET CustomerName = B.CustomerName
FROM CustomersA A (NoLock)
INNER JOIN CustomersB B (NoLock) ON A.CustomerId = B.CustomerId

And later run the Insert command
INSERT INTO CustomersA (
   CustomerId,
   CustomerName
)

SELECT
   Id,
   Name
FROM CustomersB (NoLock)
WHERE
   Id NOT IN (
      SELECT CustomerId FROM CustomersA (NoLock)
   )