Salem in the Old Testament
To all appearance it lay near "the Vale of Shaveh," described as "the King's Vale." The general opinion among the Jews was that Salem was the same as Jerusalem, as stated by Josephus (Ant., I, x, 2), who adds (VII, iii, 2) that it was known as Solyma (Grk: Saluma, variants, according to Whiston, Grk: Salem and Grk: Hierosolyma) in the time of Abraham.
It was also reported that the city and its temple were called Solyma by Homer, and he adds that the name in Hebrew means "security." This identification with Jerusalem was accepted by Onkelos and all the Targums, as well as by the early Christians.
The Samaritans have always identified Salem with Salim, East of Nablus, but Jewish and Christian tradition is more likely to be correct, supported, as it is, by Ps 76:2.
Testimony of Tell el-Amarna Tablets
The testimony of the Tell el-Amarna Letters is apparently negative. Knudtzon's number 287 mentions "the land" and "the lands of Urusalim," twice with the prefix for "city"; number 289 likewise has this prefix twice; and number 290 refers to "the city" or "a city of the land Urusalim called Bit-Ninip" Tablets (Beth-Anusat (?)).
As there is no prefix of any kind before the element salim, it is not probable that this is the name of either a man (the city's founder) or a god (like the Assyrian Sulmanu).
The form in Sennacherib's inscriptions (compare Taylor Cylinder, III, 50), Ursalimmu, gives the whole as a single word in the nominative, the double "m" implying that the "i" was long.
As the Assyrians pronounced "s" as "sh", it is likely that the Urusalimites did the same, hence, the Hebrew Heb: yerushalaim, with "sh".
International Standard Bible Encyclopedia, which is in the public domain (with minor edits).