For creating interactive web apps, Silverlight and Jquery (jqueryUI included) are used.
Is there a list of criteria based on which this selection can be made to go with either silverlight or jquery
Look, you are going to get a lot of opinions on this. However, none of us here at SO are going to be able to make a decision for you, because only you know your target audience and customer needs.
The real question here is not Technology X vs. Technology Y. More likely it is:
What technology or set of technologies will help me accomplish my goal in the most effective way possible?
Browser Plugin
Generally speaking, a browser plugin (Flash, Silverlight) is going to give you a lot of power in terms of rich user experience that would be difficult or impossible to duplicate using pure JavaScript. It is also a different programming paradigm, because it is a stateful application running inside the browser.
HTML + JavaScript
JQuery is just one of many JavaScript frameworks out there for building rich client experiences for your web application. It offers a lot of flexibility, and has a very broad reach, but at the end of the day you are still working with the DOM, and will be limited to what can be accomplished using JavaScript and angle brackets. This is also a stateless programming paradigm so you need to understand how that fits in with your overall architecture when designing your application.
Hybrid
More than likely you will be able to take advantage of both. Figure out what sub-section of your application really needs rich user interaction, and code that in Flash/Silverlight or whatever you want. The rest of your site can be done AJAX style with whatever combination of server/client frameworks you want. If you like JQuery, go with it, but don't discount other frameworks just because JQuery is all the rage right now.
Conclusion
In the end, do your homework, and make an informed decision. You will be happier having learned the pros and cons of multiple technologies and frameworks, and chosen one based on your needs, not just because someone on SO told you that X technology was awesome so you should only ever use it.
PS
Trying to say that Silverlight cannot be used for broad web use is just plain FUD. Both The 2008 Summer Olympics, and the 2010 Winter Olympics were streamed to tens of millions of people world-wide using Silverlight.
Most people on this sight will never work on anything that gets that much usage internationally...
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