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Thanks Chubler, you certainly spent much time in this.
I saw some trailing spaces in the given input files ... for robustness you should add a line
{sub("[ \r]+$","")}
just after the line
BEGIN {...

How about this using awk, note the inputfile is a tab separated text file matching you posted input.

awk -F'\t' '
BEGIN { printf "SELECT ROW_KEY_COL,\nCASE\n" }
$8 ~ "[ZN]" {
if($8=="Z")...