The ISSM 2016 update 1 has no option for the Arduino101 while creating a new project. Do I need to select the C1000 as my development board? I know both C1000 and the Arduino101 has a QuarkSE microcontroller.
Thank you for your question. Yes, you need to enable the Arduino 101 support manually. Please follow this link to enable it and create your project.
For build application for Arduino 101.
From your link, Does we must have the hardware olimex ARM-USB-OCD-H and ARM-JTAG-20-10 for flashing application firmware?
Can we flashing firmware over USB using the DFU protocol?
please refer to the below link for topic "Flashing using USB DFU"
You can use Flyswatter2 or Olimex hardware for flashing via jtag. Yes, USB DFU is available for Arduino 101. However, this is not supported in ISSM IDE. You need alternative way such as command line.
Hope it can help you.