Lieste: They are both for monsters.
The only reason(s) to use the silver sword are because the steel sword is unavailable (e.g. at the start of The Witcher, Act II, from the first game where you only have the silver), or because the monster has silver sensitivity and will be pained or otherwise damaged more by the silver.
Both swords have a steel core, but the softer silver blade would be less suitable for retaining an edge against other steel swords, or for piercing steel armours.
Loredo is merely an unscrupulous and self-serving man, far from the worst in the Lore though without redeeming qualities of any kind, I consider his death to be the best choice whichever path I choose, but he is not an archetypal monster worth hunting down at all costs, nor something fell that would shrug off the effects of a steel blade.
Dude he kidnaped an elf and raped her, much likely constantly, until she got pregnant, his mother is a drug adict, and he was selling Floatsam to Dethmold, if that does not make him worth hunting down then I am a superb witcher.