Cool question! Note: I'm primarily a philologist of Arabic and my knowledge of Hebrew is pretty much cursory, so I can't offer too much information on the history of Judaism in Arabia in general. Seeing the framing of your question in an Islamic context, I think I can be of some help though!

The biggest problem with our understanding of pre-Islamic Arabia up until the death of Muhammad is that so much of it has been influenced by the Islamic hagiographies. As you understand, considering the theological implications, we risk entering an extremely controversial discussion. It is important to realise that we possess extremely few primary sources from this period: even the Constitution of Medina, although very likely to have been composed during Muhammad's lifetime is only mentioned in sources written by – you guessed it – Muslims. All-in-all, considering the hagiographic and teleologic nature of these texts, we have to be extremely critical in assessing them.
Now, moving on to the actual event itself: the massacre of the Banu Qurayzah is mentioned in Ibn Hišām's Sīra al-Nabī (or al-Sīra al-Nabawiyya), which was based on an earlier work by Ibn Isḥāq, which is now lost. It later appears in Al-Ṭabari's Ṭarīkh al-rusul wa l-mulūk (History of the Prophets and Kings), but this version too is based on Ibn Hišām's version. According to these sources, after the Banū Qurayẓa betrayed Muhammad the latter laid siege upon their stronghold. After about a month they surrendered unconditionally and subsequently 600 to 700 men were massacred and their bodies disposed of in a large trench. It's possible that this event is refered to in the Quran (33:23; 8:55-58):

He brought down those who supported him from the People of the Book from their castles and cast fear in their hearts; a number of them you killed and a number of them you took captive.

The worst of living creatures in the eyes of God are those who disbelieve, and they do not believe (56) – those who allied you, then broke their alliance every time, they do not fear (57) so if you you victor over them in war, then disperse them so that they may remember. (58) If you fear betrayal from a people then refuse their treaty; indeed God does not love traitors.

In my understanding, the Quran is extremely vague here and does not relate to any specific event. As such, I'm not entirely convinced that the specific event is mentioned in the Qur'an. More strangely, such an event would likely not have gone unnoticed in the larger area: compare the Massacre of Nağrān, which occured about a century earlier: it's suggested that about 2 000 Christians were killed in South Arabia, which not only prompted the invasion of Yemen by the Christian Kingdom of Ethiopia, but is also corroborated by Aramaic writings from Syria as well as the Qur'an (85:4-5). It seems very unlikely that the Jewish coreligionists of the Banū Qurayẓa would have not mentioned this event at all. Incidentally, the first time this event is mentioned after Muhammad's death is during the Islamic conquest of Syria, in which this verse is used to justify the seizure of enemy lands. In short, if we are to take the Islamic sources for granted, it would mean that the complete extermination of an entire Jewish tribe would have gone completely unnoticed in an already interconnected Near East. This seems to be incredibly unlikely.

TL;DR: It's possible – but extremely unlikely – that the Banū Qurayẓa were completely wiped out
 

Sources
Al-Tabari, (1896) Tarīḫ al-Rusul wa l-Muluk, edited by M.J. De Goeje.
Hoyland, R.(1997) Seeing Islam as Others Saw It Ibn al-Kathīr, Tafsīr al-Qur’an (I have to find the exact references later; I think my edition was printed in Egypt)
Watt, M. (1970) "Ḳurayẓa" in The Encyclopaedia of Islām, Second Edition

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Warning: personal opinion following:

So what's going on here? A few days ago I had a discussion with one of my professors, where we were discussing the sometimes outrageous events described in the early Islamic sources. I personally believe that many of these stories served to explain some of the more obscure or esoteric parts of the Quran, which simply do not make sense without any context. Through folklore, which may either be original or based on earlier stories and expressly tying these to Muhammad – while in this case, simultaneously absolving him of this event by leaving the actual judgment to one of his companions – a certain spiritual authority is added. It must be mentioned that the Muslim authors recounting these events were very much aware of this and used stylistic elements to expresse their scepticism: the verb zaʿamū, ('they assert; suppose) as well as the expression wa llāhu ʿalam ('but God knows best') are generally inserted when the authors want to stress the general unrelability of their sources (see also Khalidi, *Islamic Historiography: The Histories of al-Mas‘ūdī.) ٍ