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Updating Silverlight to the current version requires first removing any older version. These instructions will take you through the steps of removal and installation for Windows 7, Windows XP, and Mac.
If you're not sure whether you have Windows 7 or XP, there's a quick test: if you have a "Start" menu button on the lower left it's Windows XP, a round button with a Windows icon instead of a word indicates Windows 7.
Note: If you finish this and it still appears that Firefox doesn't have Silverlight installed, go to Firefox's Tools→Add-Ons menu, select "Plugins" from the left, and make sure that Silverlight is enabled.
On a Mac, the procedure is different depending on whether you use Safari or Firefox.