All the tutorials i have seen regarding installation of x.509 Certificate assumes that the server machine is your local machine and you have full access to it. But my app is hosted on DiscountASP, so how can I install the certificate on their machine ?
You can't because you don't have permissions to install certificate on hosting server. If you want to use HTTPS you must pay your hosting provider for buying and installing certificate for you (or you must have plan which offers SSL or shared SSL directly). In case of message security (not supported by Silverlight) you can load certificate from file.