I was reading a bit of the Song of Roland, and was confused by the fact that the poem seemed to connect Islam to the Greek gods. I also remember hearing that Byzantine sources even a hundred years after the initial invasion were confused as to what Islam was.
That's a difficult question to answer given the diverse views of what Islam is within Muslim communities. For the sake of simplicity I'll use the Shahada "There is no God but God, and Muhammad is His messenger" In addition this will be from a European Christian point of view. Arab and Asian Christians would have encountered Islam much earlier and as such had a better understanding.
Bede who died in 735 gave an equivalence between Muslims and Saracens (sons of Sarah), although Bede claims the Muslims are the descendants of Hagar Abraham/Ibrahim's other wife.
Eulogius the Bishop of Toledo, who died in 859 saw Islam as an organised conspiracy against Christianity but didn't explore Islamic doctrine.
The Gesta Francorum was used as justification for the first Crusade but it doesn't really explore the beliefs of Muslims.
Peter the Venerable commissioned a translation of the Qur'ran from Arabic to Latin around 1142 as an attempt to prove Christian theology was superior. It was completed in 1143 by Robert of Ketton titled: "Liber legis Saracenorum quem Alcoran vocant" (The book Saracens call the Qur'ran). After it's completion Peter wrote "Summa totius haeresis Saracenorum" (Summary of the Saracen heresy) and "Liber contra sectam sive haeresim Saracenorum" (A book against the heresy of the Saracens).
There were efforts in in the late 1200s and early 1300s to better understand Islam in order to convert Muslims to Christianity theologically rather than by the sword, particularly by Raymond Lull and Ricoldo da Monte Croce. In 1311 the Council of Vienne recommended the study of Arabic to better understand Islam and how Muslims might be converted to Christianity.
European study of Islam from there didn't progress much until 1453 when the Ottomans took Constantinople.
Earnest study of Islam for its own sake didn't begin until the 1613 with the establishment of chairs of Arabic at Leiden. Separation of truth from earlier polemics was difficult but generally thought to be somewhat reliable from the end of the 17th Century.
Sources:
Hagarism: The Making of the Islamic World, P. Crone and M. Cook, Cambridge 1977
William of Tyre: Historian of the Latin East, Peter W. Edbury and John G. Rowe, Cambridge 1988
Gesta Francorum et aliorum Hierosolimitanorum, edited and translated by R. Hill, London 1962
Deux traductions latines du Coran au Moyen Age, M. Th. d'Alverny, Archives d'histoire doctrinale et littérataire du Moyen Age 1947-1948
Peter the Venerable and Islam, James Kritzeck, Princeton 1964
Crusade and Mission: European Approaches toward the Muslims, Benjamin Z. Kedar, 1988
Lots more can be said about this super-complex topic (does Christianity as a whole understand what Islam is even today?) But I've worked on a few previous questions that might help - some people understood it in the Middle Ages, but not many.
I'm a Crusader heading towards the Holy Land in 1096. How much do I understand about Islam?
Why and when did Westerners stop to refer Muslims as Mohammedans?
And a post about one medieval author's understanding of Islam