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First off the orion info is just pretty to look at. I even went so far as to uninstall the orion stuff on my server because it was so useless.
When you go to the MMC there are reports that you can create. You can create a report to check daily, or whenever you like, for failed updates and then there is an option to have that report mailed to you. All reports have the possibility to be emailed.
As far as a real time alert email if an update fails? I dont think thats gonna happen with patch manager, but i could be wrong and just not know how to make it happen.