Firstly, that's the wrong URL.
Secondly, if you get the URL wrong, software update will just error. It won't default back.
It sounds like you have bigger probalms... You should ensure that profile manager is properly pushing settings to clients.
Push the new setting to the client computer and wait for it to complete.
Once it completes, restart the client.
On that client machine in terminal type:
sudo defaults read /Library/Preferences/com.apple.SoftwareUpdate CatalogURL
type your password.
It should echo out the URL you've specified. If it doesn't, then there's something else going on preventing the setting from being pushed out.
The URL was the issue. Thank you! I used the URL referenced in http://support.apple.com/kb/HT4069 which did not include the OS X big cats' names.
Strangly enough, the payload was distributed to the computers successfully and they were set to look for the provided (wrong) URL: "http://ourserver.fqdn:8088/index.sucatalog" but when software update was run, I was able to retrieve updates from Apple.
Thank you for your help gracoat