Beat butter and sugar in bowl until creamy. Beat in cream cheese, yolks, vanilla and salt, 1 minute. Stir in flour until smooth, using enough flour so dough is firm. Divide into fourths; shape into disks; cover with plastic wrap; refrigerate at least 4 hours or overnight.
Position oven rack in top third of oven. Heat oven to 350°F. Grease large baking sheet.
On floured surface, roll 1 piece dough out into 8-inch round. Spread with 2 tablespoons jam. Sprinkle with 1/4 cup cherries, 2 tablespoons chips. Cut dough in 8 wedges. Starting at outside edge, roll up each triangle, enclosing filling. Transfer to prepared sheet, spacing inch apart. Make 24 more, using remaining dough, filling.
Brush each rugelah very lightly with milk. Sprinkle with sugar.
Bake in top third of 350°F oven until lightly browned, 20 to 25 minutes. Cool on rack.