When Pope Urban called the First Crusade in 1095, there were Christians who knew quite a bit about Islam--but they weren't living in the parts of western Europe that received the proper call to crusade.

The situation was definitely different for any Christians left living in the Near East under Muslim rule, and the Mozarabs in central/southern Spain--in short, Christians who had at least some day-to-day experience interacting with Muslims. As for western Christendom beyond Iberia (by 1095, I'm not sure how much Muslim-Christian interaction there was in Sicily), well...

When comparing Christian knowledge of Islam and Muslim knowledge of Christianity, Christians seem to be batting at a major disadvantage for a simple reason: they came first. From the beginning, the architects of Islam had to deal with a world in which Christianity existed and was a powerful, popular lex (law => way of ordering the universe). The Islamic worldview, therefore, has Christianity already built in. If Muhammad is the central prophet, Islam gloms earlier religious tradition into its idea of God speaking through prophets. Holy people in Judaism? Prophets! Holy people in Christianity? Prophets!

In other worlds, Muslims make sense of Christianity in light of their own belief system. It appears "natural" and "inherent" to Islam, because the earliest Muslims had encountered a version of that world. When Muslims later come into contact with Hindus and with West African traditional believers--after Islam has solidified as a belief/praxis system--they'll apply the same method of "understanding this religion in light of Islam." But because Islam was not designed from the ground up to accommodate this, they'll have to grasp the new ideas in light of their existing worldview. As Anna Akasoy showed, for medieval Muslim views of Hinduism, that often meant seeing it as a form of Greek polytheism; for west African belief, that often meant considering them "fire-worshippers," which was one of the frameworks medieval Muslims used to (mis)understand Zoroastrianism.

In other words: making sense of new information, new religions, in light of existing knowledge. It just looks better in the case of Christianity and Judaism because those philosophies had to be explained in order for there to be an Islam at all.

Well, Christianity came second, so there wasn't any "inherent" place for Islam as such. Unsurprisingly, Christians followed the same pattern of "understanding the new in terms of the known," which meant in terms of Christianity. There were a lot of ways this happened over the course of the Middle Ages. But the two most dominant, and the two definitely shifting back and forth and overlapping and uniting and dividing in the late eleventh-early twelfth century, were: idolatry and heresy.

Think about it. Christianity's central human figure is also God, right? (Sure, the average medieval Christian probably doesn't have the best understanding of their own faith, but they can probably recite the idea that Jesus is human and divine at the same time.) Islam has a central human figure, too; it stands to reason that they would likewise think their major human is also divine. Christianity holds belief in God as a Trinity; what kind of Trinity might we identify for Muslims? A curious pattern: some eleventh-century Christian authors make the same connection with Muslims that Muslims do for Hindus: they're worshipping Greek gods with Muhammad (Mahoumet) tagged on as an additional one. Islam, in the continental Christian imagination, looked primarily like idolatry by the 1090s.

There are some infamous and spectacular specific examples in surviving sources of literate Christians' theories on Islam (the Song of Roland having one of the best known). However, given that we're talking about your average soldier here rather than a Cistercian monk or noblewoman patron of poets, I think it's actually more useful to speak in the broad generalities of how did Christians tend to understand Islam and Muslims. That is, in patterns that everyone would be swimming in, rather than an individual written record.

As subsequent crusades were called, although never with the same enthusiasm (especially at the peon level) as the First, at least some elite Christians had clearer, better-grounded ideas about Islam. The first Latin translation of the Quran in the twelfth century along with the translation of earlier Iberian polemical treatises gave Latin theologians a basis for understanding Islam as a serious religion--as Judaism was, to Christians--instead of a vague "let's understand this in terms of a faraway polytheism." As John Tolan puts it, they started to see Islam as a "worldly heresy," with Muhammad as the leader and heresiarch rather than a presumed deity.

"Worldly" is a good adjective to describe many of the more typical (as preached in sermons, at least) views of Christians in Iberia that did have closer contact with Muslims. Olivia Remie Constable showed that Spanish Christian secular law and sermons emphasized the outward conduct and rituals of Muslims (minnarets, the call to prayer, food practices) as the key components of religion rather than the more theological ones.

This is the sentiment under which, from the fourteenth century (so, well beyond the First Crusade), many peasant/urban burgher Christians in France, England, Germany would have learned about Islam. Sermons by Franciscan preachers, who were going all-in on the idea of the Immaculate Conception (that Mary was conceived without original sin), absorbed into their tradition a quote from, of all places, hadith that could be interpreted to suggest Maryam's stainlessness. Except, as with a game of Telephone, somewhere along the way it got flipped from hadith to part of the Quran ("liber alcoran", or sometimes just any old vaguely-similar name). Now, in Islam, the Quran is straight-up, zero-mediation revelation; it is actually God speaking. The Christian sermons are very, very explicit instead in their belief that Muhammad wrote the Quran. In other words: same God, but Muhammad (and consequently Muslims) are getting him all wrong. Islam is a "sect", a heresy, not a different belief tradition altogether.

Christians going on crusade would have had some idea that they were saving Christianity and its Holy Land from people who were not Christians, or eventually who were bad Christians. Peter the Hermit, generally considered the architect of the so-called "Peoples' Crusade" (which may not have been so "people's" after all), wrote and preached that Muslims were "invaders" to the Holy Land--the idea of a difference of belief was absolutely there, and probably tending more towards idolatry than heresy at the time as long as you keep in mind those are fluid categorizations.

But their understanding of Islam would be filtered through what they knew about Christianity as defining the universe, rather than what they knew about a world that had Christianity as one small part of it.

u/sunagainsold follow up question:

Today Jerusalem, Israel, etc. is considered (at least by the general population of the U.S. and/or the world) to be Middle Eastern i.e. not located in what is traditionally "the West" even though Israel itself is more or less a Western nation culturally.

At the time of the First Crusade would Palestine, Syria, Lebanon, etc. have been considered part of Europe's and Christendom's territory because of the millennium of Greek, Roman, and Byzantine rule? Would European leaders have considered that area more rightfully theirs not just philosophically (where Jesus died belongs to Christendom!) but geographically and culturally?

Related- was there anyone who "defected"? I.e. came to the holy land as a crusader, but then decided "Hey- these guys aren't so bad" and stayed behind instead of going home?