Woops, that second ISNULL should be zero - assuming you don't have any negative costs.

How about something like this...

SELECT

TD.col_id

,TM.colid

,CASE WHEN ISNULL(TD.Cost, 999999) < ISNULL(TN.Cost, 999999) THEN TD.Cost ELSE TM.Cost END AS 'Lowest Cost'

FROM

test_td AS TD

FULL OUTER JOIN test_im AS IM ON IM.MfgPartNbr = TD.MfgPartNbr

...