From the installation page (see Related Links), save Silverlight.exe.
Silent installation from the .exe:
(doing a silent install from the .exe will also upgrade previous versions without the prior need to uninstall)
If you want to use the .msi, you can extract is by running silverlight.exe /extract. You'll also see a silverlight.7z file, from which you can extract silverlight.msp using WinZip (or your choice of unzipper). You can discard all other files except for the .msi and .msp.
You can then do a silent installation from the .msi, but first uninstall Silverlight 2.0 if it's installed otherwise it'll complain:
Extract the contents of the downloaded 'Silverlight.exe' using winzip/rar into a new directory e.g. c:\silver & subsequently extract the contents of 'silverlight.7z' (into the same folder). From the command-line run:
The msi (c:\silver\silverlight.msi) has now been updated to include the msp's content. Make sure you keep hold of the 'PFiles' folder too - this is required, everything else can be deleted.
Optional: If you don't want the PFiles folder hanging around; open c:\silver\silverlight.msi in your MSI editor of choice (I use Wise Package Studio 7) and update the media entries accordingly to use either internal or external cabs (whichever you prefer) & re-compile. The PFiles dir is no longer required.
You can now create/apply a transform on the msi to disable auto-updates etc. as already documented by DanGay.