You are making quite a leap from the Crusades to the modern period. The key to understanding the current situation is in the 19th and 20th century. Most people in the study of the conflict tend to focus primarily on 1948 to now, the creation of Israel, the subsequent wars and the context of the modern political reality. This will be long but relatively general. The key to understanding why the state was founded in 1948 rests with Britain.

Victorian Britain had a fascination with the Holy Land. In part this was political, cultural and religious. Politically the Ottoman Empire controlled the region but it was nicknamed the “Sick man of Europe”. It was seen that the Empire was in decline. Britain and France did not want the territory of the Ottoman Empire to fall within Russian control. Culturally people were interested in seeing a romanticised form of foreign lands. A large part of this cultural interest was shaped by European's views of other places in the framework of Imperialism. Victorians also were shaped by religious fervour as there was a great deal of Evangelicalism. With this religious belief there was a lot more interest in the places to which such events happened.

Jewish people have always had a belief about the return to the Holy Land as part of religious custom. In the 19th Century there was a development of a political Zionist movement by Theodor Hershel. He wanted to create a return to the Holy Land. The reasons for this are primarily the discrimination Jewish people suffered through as well as a form of nationalism. The anti-Semitism of the 19th century is evident; from pogroms to the Dreyfus Affair. And nationalism was obviously a rising current in political affairs, such as the creation of states like Italy or Germany in Europe. Herzl wanted to increase the emigration to Palestine. There was also Christian Zionism, Christians who believed that the return of the Jews to Israel would signal the second coming of Jesus Christ.

The British government began a relationship with Zionists. In part this was fuelled by Christian Zionism but there were other concerns. Anti-Semitism in a way helped fuel this relationship because some believed Jewish conspiracy, that they did have vast amounts of finances and control; they viewed them as a rather monolithic block of people (even though this was not the factual case). At one point land in British East Africa was even offered to appease the Zionists. They rejected this proposal.

When the First World War broke out Britain began an armed campaign against the Turks. Britain during this time had a policy of supporting the Arabs against the Turkish. Britain offered to give the Arabs a nation for themselves in reward for their support (this can be seen in the McMahon-Hussein Correspondence). But the British alongside the French had agreed to carve up the area into spheres of interest. This was the Sykes-Picot agreement. There is a great deal of historiography on this subject. British policy makers argued that the deal was contingent on masses of support which they did not receive. Arab contemporaries view Britain as essentially betraying them. After WW1 the area became part of the Palestine Mandate to be administered via the League of Nations by Great Britain.

During the war Britain had put forward a document called the Balfour Declaration. When the war reached a near stalemate the belief was that supporting the Zionist cause would help Jews support the war effort. There was also a degree of Zionist support in the government. Palestine was seen as a strategically important place due to its proximity to Suez canal and there was a belief that facilitating this immigration could develop the area quickly. The Balfour Declaration is seen as the key document in the facilitation of a Jewish homeland.

Sir Herbert Samuel became the High Commissioner for Palestine. He was Jewish himself and expressed some support for the Zionist cause. He began a process that laid the groundwork for the territory. Now the historiography begins to get murky. There are three generalised views: the Arabs view themselves as being betrayed by the British-Zionist cause; the Zionists feel themselves betrayed by the British and the British view themselves as essentially being “between a rock and a hard place”. Samuel had to juggle between the interests of allowing Jewish immigration to the area, the Arabs who lived there and British interest in the area. While it can be seen that he was essentially the facilitator of the British-Zionist alliance as High Commissioner, he did try to provide land for people and strike a balance between the parties in development of the area.

Arab sentiment against Jewish immigration began earnestly in situations such as the 1929 Western Wall riots. There had been a series of disputes over the holy sites in Jerusalem for years. For Arabs the increased immigration was beginning to make them feel like the future of their country was in jeopardy. Hundreds died in the riots. Between 1936 and 1939 there was a revolt by Arabs to create a nation and to stop the Jewish immigration. It began with general workers strikes but ended in violence. Thousands died and many fled. In response to this the British government created a White Paper in 1939 to reduce Jewish immigration to the area and to facilitate a nation state of Palestine for both Jews and Arabs.

Post WW2 and the situation was dire. Many Jews were trying to immigrate to Palestine but the British were trying to stop it, even going so far as to put the immigrants in camps. Jewish militias such as the Igrun started campaigns against the British, even bombing the King David hotel killing 91. The British eventually accepted their position that they would leave because they couldn't control the situation. The UN put forward an idea of the partition and creation of two states. The Jews declared their own state of Israel. This led to the subsequent Arab-Israeli war and the victory for Israel. Hundreds of thousands died, fled and were displaced.

The key problems in studying this issue are the different historical perspectives. Did the Palestinians have any concept of nationalism before the First World War? How did the majority of Jews see political Zionism? How much did the British actually believe and support in Zionism? To what extent did the British handling of the situation contribute to the modern conflict? These questions have been argued about back and forth massively due to the current political reality.

Sources
E. Bar-Yosef, The Holy Land in English Culture 1799-1917 (2005).
N. Benthell, The Palestinian Triangle: The Struggle between the British, the Jews and the Arabs, 1935-48 (1979).
D. K Fieldhouse, Western Imperialism in the Middle East, 1914-1958 (2006).
G. Kramer, A History of Palestine: From Ottoman Conquest to the Founding of the State of Israel (2008).
C. Sykes, Crossroads to Israel, 1917-1948 (1973).

Edit: Spelling and grammar.