Hmm... I'm not sure I understood the question... are you asking how to mark all entries with duplicity, instead of leaving always one of them unmarked? If so, then try this:

UPDATE e

SET Dup = Yes

FROM Employees e

JOIN

(SELECT FirstName, LastName, count(EmployeeID)

 FROM Employees

 GROUP BY FirstName, LastName

 HAVING count(EmployeeID) > 1) as dupl

ON e.FirstName = dupl.FirstName AND e.LastName = dupl.LastName

I didn't test the query, so I hope there isn't any blunder in it and it will work :-).

cheers, Vladan