t-sql - combinatorics

I'm trying to find all possible character combinations in a variable length string.

For example: '--' would have 2^n = 2^2 = 4 possibilities, 'x-', '-x', 'xx', '--'

I think that essentially I need to loop through c(2,2) + c(2,1) + c(2,0) where
c(n,r) = n! / (r! * (n-r)!) but I'm having trouble getting things to work in with a cte. So far everything starts to break down with you add characters to the string.

Using a numbers table -

declare @s varchar(15)
set @s = '--'

;with subset as (
select cast(stuff(@s,number,1,'x') as varchar(15)) as token,
     cast('.' + cast(number as char(1)) + '.' as varchar(11)) as permutation,
     cast(1 as int) as iteration ,
     number
from numbers where number between 1 and len(@s)
union 
select @s, '.0.', 1, 0
) ,

combination as (
select  cast(stuff(token,n.number,1,'x') as varchar(15)) as token ,
    CAST(permutation+CAST(n.number AS CHAR(1))+'.' AS VARCHAR(11)) AS permutation,
    iteration + 1 as iteration,
    n.number   
from subset s   inner join numbers n on substring(s.permutation,2,1) = n.number + 1
where n.number between 1 and len(@s)
)

select * from subset union combinations

This returns

token           permutation iteration   number
--------------- ----------- ----------- -----------
--              .0.         1           0
x-              .1.         1           1
-x              .2.         1           2
xx              .2.1.       2           1

I can't figure out how to get it working past two characters ( '---', '----' ...)
Maybe I'm looking at this wrong any pointers would be greatly appreciated. Sorry about the sql i know it's pretty ugly with lots of errors. Even after days of research my knowledge of cte's is horrid.

Suppose you have a auxiliary Numbers table with integer numbers.

DECLARE @s VARCHAR(5);
SET @s = 'ABCDE';

WITH Subsets AS (
SELECT CAST(SUBSTRING(@s, Number, 1) AS VARCHAR(5)) AS Token,
CAST('.'+CAST(Number AS CHAR(1))+'.' AS VARCHAR(11)) AS Permutation,
CAST(1 AS INT) AS Iteration
FROM dbo.Numbers WHERE Number BETWEEN 1 AND 5
UNION ALL
SELECT CAST(Token+SUBSTRING(@s, Number, 1) AS VARCHAR(5)) AS Token,
CAST(Permutation+CAST(Number AS CHAR(1))+'.' AS VARCHAR(11)) AS
Permutation,
s.Iteration + 1 AS Iteration
FROM Subsets s JOIN dbo.Numbers n ON s.Permutation NOT LIKE
'%.'+CAST(Number AS CHAR(1))+'.%' AND s.Iteration < 5 AND Number
BETWEEN 1 AND 5
--AND s.Iteration = (SELECT MAX(Iteration) FROM Subsets)
)
SELECT * FROM Subsets
WHERE Iteration = 5
ORDER BY Permutation

Token Permutation Iteration
----- ----------- -----------
ABCDE .1.2.3.4.5. 5
ABCED .1.2.3.5.4. 5
ABDCE .1.2.4.3.5. 5
(snip)
EDBCA .5.4.2.3.1. 5
EDCAB .5.4.3.1.2. 5
EDCBA .5.4.3.2.1. 5

StackExchange Database Administrators Q#11544, answer score: 5