For the form 1098 interest - we are married and filing separately - we each paid 50% of the interest - in this case do I enter half of the interest amount ?
Yes, since you each paid half.
But, if the money came out of a joint account (that is you really don't know whose money paid it), you can split it any way you want. You may want to experiment. Be aware, if one of you itemizes, the the other must too. The other cannot use the standard deduction.
But a bigger question, is why are you filing separately. You will, almost always, pay more tax that way. see