Not fixed here.  I'm running jaunty alpha with update-notifier-kde version 0.16

I just tested putting a package on hold using aptitude, and then fired up update notifer kde and tested it.  It ignored my hold and updated it anyway:

Here's the 3 available updates according to aptitude:

paul :~$ aptitude full-upgrade 
Reading package lists... Done  
Building dependency tree       
Reading state information... Done
Reading extended state information      
Initializing package states... Done     
The following packages will be upgraded:
  liblensfun-data [0.2.3-0ubuntu2 -> 0.2.3-0ubuntu3]  xserver-common [2:1.6.0-0ubuntu3 -> 2:1.6.0-0ubuntu4]  xserver-xorg-core [2:1.6.0-0ubuntu3 -> 2:1.6.0-0ubuntu4]  
3 packages upgraded, 0 newly installed, 0 to remove and 0 not upgraded.                                                                                                
Need to get 0B/2430kB of archives. After unpacking 1024kB will be freed.                                                                                               
Do you want to continue? [Y/n/?] n                                                                                                                                     
Abort.                                                                                                                                                                 

Here's the installed version of xserver-common:

paul :~$ lspkg xserver-common
ii  xserver-common                             2:1.6.0-0ubuntu3                     common files used by various X servers

Here's aptitude putting xserver-common on hold:

paul :~$ aptitude hold xserver-common
Reading package lists... Done        
Building dependency tree             
Reading state information... Done    
Reading extended state information      
Initializing package states... Done     
No packages will be installed, upgraded, or removed.
0 packages upgraded, 0 newly installed, 0 to remove and 3 not upgraded.
Need to get 0B of archives. After unpacking 0B will be used.
Writing extended state information... Done
Reading package lists... Done
Building dependency tree
Reading state information... Done
Reading extended state information
Initializing package states... Done

Here's verifying that aptitude sees and honors the hold:

paul :~$ aptitude full-upgrade
Reading package lists... Done
Building dependency tree
Reading state information... Done
Reading extended state information
Initializing package states... Done
The following packages will be upgraded:
  liblensfun-data [0.2.3-0ubuntu2 -> 0.2.3-0ubuntu3]  xserver-xorg-core [2:1.6.0-0ubuntu3 -> 2:1.6.0-0ubuntu4]
2 packages upgraded, 0 newly installed, 0 to remove and 1 not upgraded.
Need to get 0B/2362kB of archives. After unpacking 1024kB will be freed.
Do you want to continue? [Y/n/?] n
Abort.

Now, this is where I opened update notifier kde and let it do the updates.  And it did still update xserver-common, as seen by this version being installed:

paul :~$ lspkg xserver-common
ii  xserver-common                             2:1.6.0-0ubuntu4                     common files used by various X servers

Why did you think this was fixed in jaunty?  Are you using a different version?