jquery update problem

I replaced the jquery.js file form the misc folder of the drupal installation. it worked properly, but the CCK:node_reference:autocomplete is stopped working.

Then i replaced the jquery.js file with the older one. the autocomplete worked properly.

Then i installed the jquery_update module. The jquery version was still very low. So, again i replaced the "replace" folder of the jquery_update module. again the autocomplete stopped working.

How can i use the latest jquery version with everything working properly??

thnaks