Add TOP 1 to sub query is my quick answer.
update tbl_M_MasterLogs set rptprobtype =
(Select TOP 1 [Problem Type]
from tbl_rpt_MasterData
where tbl_M_MasterLogs.CaseNo = tbl_rpt_MasterData.CaseNo)
The other way would be
update tbl_M_MasterLogs
set rptprobtype = tbl_rpt_MasterData.[Problem Type]
FROM tbl_M_MasterLogs
INNER JOIN tbl_rpt_MasterData
ON tbl_M_MasterLogs.CaseNo = tbl_rpt_MasterData.CaseNo)