I initially suggested SQL Server Service Broker for this. However, after some research it turns out this is probably not the best way of handling the problem.
What you're left with is the table architecture you've asked for. However, as you've been finding, it is unlikely that you will be able to come up with a solution that meets all the given criteria, due to the great complexity of locking, transactions, and the pressures placed on such a scheme by high concurrency and high transactions per second.
Note: I am currently researching this issue and will get back to you with more later. The following script was my attempt to meet the given requirements. However, it suffers from frequent deadlocks and processes items out of order. Please stay tuned, and in the meantime consider a destructive reads method (DELETE with OUTPUT or OUTPUT INTO).
SET XACT_ABORT ON; -- blow up the whole tran on any errors
SET TRANSACTION ISOLATION LEVEL READ COMMITTED;
BEGIN TRAN
UPDATE X
SET X.StatusID = 2 -- in process
OUTPUT Inserted.*
FROM (
SELECT TOP 1 * FROM dbo.QueueTable WITH (READPAST, ROWLOCK)
WHERE StatusID = 1 -- ready
ORDER BY QueuedDate, QueueID -- in case of items with the same date
) X;
-- Do work in application, holding open the tran.
DELETE dbo.QueueTable WHERE QueueID = @QueueID; -- value taken from recordset that was output earlier
COMMIT TRAN;
In the case of several/many rows being locked at once by a single client, there is a possibility of the rowlock escalating to an extent, page, or table lock, so be aware of that. Also, normally holding long-running transactions that maintain locks is a big no-no. It may work in this special usage case, but I fear that high tps by multiple clients will make the system break down. Note that normally, the only processes querying your queue table should be those that are doing queue work. Any processes doing reporting should use READ UNCOMMITTED or WITH NOLOCK to avoid interfering with the queue in any way.
What is the implication of rows being processed out of order? If an application instance crashes while another instance is successfully completing rows, this delay will likely cause at least one row to be delayed in its completion, causing the processing order to be incorrect.
If the transaction/locking method above is not to your satisfaction, another way to handle your application crashing would be to give your instances names, then set up a monitor process that has the capacity to check periodically if those named instances are running. When a named instance starts up it would always reset any unprocessed rows that possess its instance identifier (something as simple as "instance A" and "instance B" would work). Additionally, the monitor process would check if the instances are running and if one of them is not, reset the rows for that missing instance, enabling any other instances to run. There would be a small lag between crash and recovery, but with proper architecture it could be quite reasonable.
Note: The following links should be edifying: