Amyl,
It should be no problem, trhough Ialways put the sub-select in brackets
e.g.
Select t1.col,
Case col2
when '1' then
(select t2.col3 from table2 t2
where t1.col = t2.col)
else
'2'
END as column2
from
table1 as t1
The sub-query must be a singleton select (i.e. must only return 1 row)