I'm not sure where you're getting the quote from - I can't see it in Maalouf's section on the fall of Jerusalem, although he does mention the slaughter of Jews. Could you provide a page number and edition maybe?

Even beyond that it's difficult to get at the exact origin of the story, since The Crusades through Arab Eyes isn't aimed at an academic audience, so there's no footnotes telling us which primary sources the account comes from (although perhaps someone here more familiar with the Arab and Hebrew historiographies could help out). So we can only speak generally for the moment about the event and what we can say is that it's probably correct in its broadest sentiments. Accounts of the Sack of Jerusalem from all sides, Christian and Muslim, acknowledge that the Crusades sacked the city violently, stealing, killing and raping pretty much indiscriminately - the Orthodox Christian community were just as effected as the Jews. I wouldn't say for certain that the details of this particular incident are definitely true though - when describing the Sack most chroniclers (again, from all sides) were trying to make a moral point of what an awful, sinful thing it was and so stories like this need to be taken with a grain of salt. The whole situation was undoubtedly bloody however.

I'm not sure what you mean by the first part of your question about why the Jews would fight to defend Jerusalem - given that in medieval warfare, everybody knew what happened when an invading army captured a city, I don't think they needed much other reason than a desire to save their own families and property. However, many popular narratives of the Crusades nowadays paint it as a sort of existential struggle between Christianity and Islam, which might lead one to wonder what the Jews were doing. This existential-struggle view of the Crusades is a modern fabrication, however, used to further the political programs of certain groups within both 'civilizations'. The First Crusade was, in actuality, incredibly messy and religion was not the biggest indicator of where allegiances lay. The Crusaders attacked Christian communities and cities in Cilicia and Edessa, and made alliances with Muslim rulers in the Northern Levant. The Near East at the time was incredibly fractured, and one factor in the Crusaders' success was the disunity and infighting amongst Arab and Turkish Muslims in the region (greater, though not by much, than the Crusaders' own disunity and infighting). Jerusalem's Jews in 1099 therefore probably saw the Crusaders as no more than yet another army coming to occupy their ancestral city and therefore were willing to fight, and ultimately die in many cases, in the hopes of protecting their families, community and property.