Hi ChrisI88,
Once you have upgraded all of your hosts to higher version in your inventory, you should be safe to manually remove the old patches from your hard drive. There is no way to do it through the GUI and if you want to not see the patches in the Patch Inventory window, you will have to wipe the VUM database and recreate your baselines. Default patchstore location is c:\documents and settings\all users\application data\vmware\update manager\da ta\hostupdate\.