SQL 7 Endless Loop!

I have an SQL script that runs as part of a batch process in order to number line items in timecards. It basically consists of 2 nested cursors with a number increment and update inside the inner cursor. The problem is that it gets stuck (seemingly at random) in a loop (incrementing and updating within the inner cursor) until I get an arithmetic overflow and it just moves on to the next card. I'm new to my job as a dba and the boss is breathing down my neck.....any assistance would be GREATLY appreciated!!

Thanks..Nick

Here is the code for the script:

declare @SEQ int,
@NUM smallint,
@SUM smallint,
@TSQ int,
@TLI int

declare LINES_OUT_OF_SEQ_CSR cursor for
select TIMECARD_SEQ_NBR
from EMPL_TMCD_VER_DETL
where NEW = '1'
order by TIMECARD_SEQ_NBR

open LINES_OUT_OF_SEQ_CSR

fetch next from LINES_OUT_OF_SEQ_CSR into @SEQ

while @@fetch_status = 0
begin
declare LINES_TO_CHG_SEQ_CSR cursor for
select TIMECARD_SEQ_NBR,
LINE_ITEM_SEQ_NBR
from EMPL_TMCD_VER_DETL
where TIMECARD_SEQ_NBR = @SEQ
order by LINE_ITEM_SEQ_NBR

select @NUM = 0

open LINES_TO_CHG_SEQ_CSR

fetch next from LINES_TO_CHG_SEQ_CSR into @TSQ, @TLI

while @@fetch_status = 0
begin
select @SUM = @NUM +1

select @NUM = @SUM


update EMPL_TMCD_VER_DETL
set TIMECARD_VERSION_ITEM_NBR = @NUM
where LINE_ITEM_SEQ_NBR = @TLI
and TIMECARD_SEQ_NBR = @TSQ

fetch next from LINES_TO_CHG_SEQ_CSR into @TSQ, @TLI
end

deallocate LINES_TO_CHG_SEQ_CSR

fetch next from LINES_OUT_OF_SEQ_CSR into @SEQ
end

deallocate LINES_OUT_OF_SEQ_CSR
go