Here is a script to generate randon characters in SQL Server

It also allows you to generate the characters in random as well as required format. There are four types of format the function supports:

Formats:
1. ‘Proper’ – proper name form (i.e. Xxxxx)
2. ‘Upper’ – all uppercase (i.e. XXXXX)
3. ‘Lower’ – all lowercase (i.e. xxxxx)
5. ‘Mixed’ – randomly mixed case (i.e. xXxxxXXxx)

Create View dbo.Q_Random as 
	Select Rand() as [RandomNumber]
GO
Create Function dbo.fn_GenerateText 
				(@Length integer, @Format varchar(6) = 'Mixed')
Returns varchar(256)
as 
Begin

--	Formats:	
--		'Proper' - proper name form (i.e. Xxxxx)
--		'Upper'  - all uppercase (i.e. XXXXX)
--		'Lower'  - all lowercase (i.e. xxxxx)
--		'Mixed'  - randomly mixed case (i.e. xXxxxXXxx)
--		 null    - randomly mixed case (i.e. xXxXxxxxxX)
--

Declare 
	@RandomValue             varchar(256), 
	@Count                   integer,
	@RandomNumber            float, 
	@RandomNumberInteger     integer, 
	@CurrentCharacter        char(1),
	@ValidCharactersLength   integer,
	@ValidCharacters         varchar(255) 

Set @RandomValue = '';

If (@Length = 0) 
	Goto ReturnData 


If (@Format = 'Mixed') 
	Set @ValidCharacters = 'ABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqrstuvwxyz0123456789'; 
else
	Set @ValidCharacters = 'ABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqrstuvwxyz';


Set @ValidCharactersLength = Len(@ValidCharacters); 
Set @CurrentCharacter      = ''; 
Set @RandomNumber          = 0; 
Set @RandomNumberInteger   = 0; 

Set @Count = 1; 


While @Count <= @Length 
Begin 
	Set @RandomNumber = (Select RandomNumber from Q_Random); 

	Set @RandomNumberInteger = Convert(integer, ((@ValidCharactersLength - 1) * @RandomNumber + 1)); 
 
	Set @CurrentCharacter = SubString(@ValidCharacters, @RandomNumberInteger, 1); 

	Set @RandomValue = @RandomValue + @CurrentCharacter; 

	Set @Count = @Count + 1; 
End 


If @Format = 'Lower' 
	Set @RandomValue = Lower(@RandomValue); 

If @Format = 'Upper' 
	Set @RandomValue = Upper(@RandomValue); 

If @Format = 'Proper' 
	Set @RandomValue = Upper(Left(@RandomValue, 1)) + Substring(Lower(@RandomValue), 2, (@Length - 1));  

--	... or the default  gives random `casing`, and 'Mixed' gives random alphanumeric `casing`


ReturnData:

Return @RandomValue 

End 

Sample Executions:

Select dbo.fn_GenerateText(10,’Lower’)
Select dbo.fn_GenerateText(10,’Upper’)
Select dbo.fn_GenerateText(10,’Mixed’)–default value
Select dbo.fn_GenerateText(10,’Proper’)