;WITH N(n) AS (SELECT 1 UNION ALL SELECT n+1 FROM N WHERE N < 50)
SELECT
	a.item,
	ROW_NUMBER() OVER(PARTITION BY a.item ORDER BY (SELECT NULL)) AS RN,
	1 AS Qty
FROM
	YourTable a
	INNER JOIN N ON n.n <= a.qty;

;WITH N(n) AS (SELECT 1 UNION ALL SELECT n+1 FROM N WHERE N < 50),

N2(item, RN) AS (	
	SELECT
		a.item,
		ROW_NUMBER() OVER(PARTITION BY a.item ORDER BY (SELECT NULL)) AS RN		
	FROM
		tbl a
		INNER JOIN N ON n.n <= a.qty)

SELECT LEFT(item, LEN(item) - 3) + CASE 
		WHEN RN > 100 THEN ''
		WHEN RN > 100 THEN '0'
		ELSE '00' END + CAST(RN AS VARCHAR(10)),
	1 AS Qty 
FROM N2