nelze určit cílovou tabulku pro UPDATE v klauzuli FROM

zabalte jej do poddotazu (takže vytvoříte dočasnou tabulku pro výsledek ). Také doporučuji použít ANSI SQL-92 formát.

update table3 d 
set    status = 'Complete'
where  d.id in 
(
    SELECT ID
    FROM
    (
        select  b.id 
        from    table1 a 
                INNER JOIN table3 b
                    ON a.id = b.table1_id
                INNER JOIN table2 c
                    ON c.id = b.table2_id
        where   c.examId = 16637 and 
                a.id in (46,47,48,49) 
    ) xx
);

nebo pomocí JOIN

update  table3 d 
        INNER JOIN
        (
            SELECT ID
            FROM
            (
                select  b.id 
                from    table1 a 
                        INNER JOIN table3 b
                            ON a.id = b.table1_id
                        INNER JOIN table2 c
                            ON c.id = b.table2_id
                where   c.examId = 16637 and 
                        a.id in (46,47,48,49) 
            ) xx
        ) y ON d.id = y.id
set status = 'Complete'