Otherwise, you might be getting library interference, as by default rails uses prototype, which namespaces the $ variable to point to itself. jQuery does the same thing, which is what can lead to the interference. However, jquery has a compatibility mode which lets it live side by side with prototype (forget exactly how to do it, but if you google around, you should be able to find it). This lets you assign jQuery to $j (or whatever you want really). This lets you use both prototype (or mootools, or whatever) and jquery next to eachother, though sometimes you'll have to search and replace your way through some jquery plugin to make it use $j instead of $ (even though plugins are supposed to use the longer jQuery namepace to avoid this issue, it's a pain to write the extra 5 character ;-).
That having all been said, the way I would approach this (if I were doing it) is to scrap having a create_comment.js.erb. You don't really need that. I would bind the onclick event of the comment submit button to a function which handles the ajaxification of the form (in jquery, you do this with the click function). Inside that function, I would submit the form using an ajax post request. I think you can specify a success callback function which executes assuming that the post works as it should. This callback would then take the posted comment and throw it in a new comment div (or whatever).
Also, since you aren't using the create as the controller action name, I would make sure that you have that action routed properly to the post.