From what I have read, in the late 19th century through to the 1960's the dominant intellectual and ideological trends were towards modernism, nationalism, arabism, and islamic modernism. They were trying to reconcile and combine western rationalism and modern political thought with their cultural and religious heritage. Yet now these groups are routinely sidelined or outright and violently overpowered by radical islamist groups. What happened to change the tide of popular thought?
I'm on my phone, but please reply here to me tomorrow if no one answers satisfactorily so I get a notification and I'll try my best.
For me the tipping point is the fall of grace of Nasser's Egypt after the destruction of the Egyptian army by the Israeli forces during their last brief war (thus discrediting this brand of ethnic nationalism)and the increase of influence of direct Wahhabi funds across the region. But people would debate it and it's OK since history and especially recent history is often about conflicting analysis and highlighting different factors. (When sensitively motivated and not just political propaganda)
If I were you, I'd watch The Power of Nightmares by Adam Curtis, not an history book per se, but it gives some interesting perspectives and his personal take on the topic of the rise of Islamic militancy in the second half of the 20th century.
Since no one else has pointed this out, I'd just like to say Arab or middle eastern =/= Muslim. Only about 20% of muslims live in the middle east and only about half of those are Arabs. Your question makes sense when taking Arabs and Arab nationalism but I think it makes less sense to include the wider Muslim world like Indonesia.