I think that based on an empty project, using the default project template for ASP.NET MVC, you need to do this:
src="<%=Url.Content ("~/Content/Scripts/jquery-1.3.2.js") %>"
All resources are placed in the Content folder by default, unless you change this, or I just remember it incorrectly.
In any case, when the page displays an html source check and finds out what the src attribute is being evaluated for, and make sure that it is correct. Once I had the same problem, and it turned out that it turned out.
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