[sql] When doing a MERGE in Oracle SQL, how can I update rows that aren't matched in the SOURCE?

You can do it with a separate UPDATE statement

UPDATE report.TEST target
SET    is Deleted = 'Y'
WHERE  NOT EXISTS (SELECT 1
                   FROM   main.TEST source
                   WHERE  source.ID = target.ID);

I don't know of any way to integrate this into your MERGE statement.