I am planning to distribute an app using Ad-Hoc Distribution using the steps outlined here:
http://aaronparecki.com/How_to_Distribute_your_iOS_Apps_Over_the_Air
But I was wondering how Ad-Hoc distribution handles updates. Will the app automatically check our server for updates, or do we have to re-direct the user to our server url to download it manually each time?
There is no in-built update process/service for Ad-Hoc distribution. You need to push the build and advise users yourself. Have you looked at TestFlight?