Can Active Directory also be used as a Patch Management Solution?

Yes, Group Policies can be used to distribute software. Simple software packages can be distributed without too much trouble – larger more complex applications and diverse computing environments call for something more flexible like SMS or CCM from On Technologies. Another solution would be to use a SUS setup. This is a method Microsoft has used to provide customers with a way a specifically deploying patches and updates. This works in conjunction with the Automatic Update Feature on Windows 2000/XP/2003. Here is where you can find more information on the SUS solution (which doesn't cost you anything by the way):
http://www.microsoft.com/windowsserversystem/sus/susoverview.mspx