import arcpy
count=0
# Loop through the table
rows = arcpy.UpdateCursor("Table.dbf")
for row in rows:
# Get the values in the Category & FREQUENCY fields
num = row.getValue("Category")
freq = row.getValue("FREQUENCY")
# Add one to the count
count=count+1
# If count is <= the frequency
if count <= freq:
print "Field value "+str(num)+" assigned a "+str(count)
# Write count in field Seq
row.Seq = count
# Execute the new values to the table
rows.updateRow(row)
# Reset counter when freq is reached.
if count == freq:
count=0
print "\nDone.\n"