Right throughout his long and illustrious writing career, Sir Walter Scott was strongly attracted to the Middle Ages. During the Romantic era, many artists and writers hankered after what they saw as a much simpler time, when knights of yore embarked upon chivalrous quests, and the cultural and religious unity of pre-Reformation Christendom ensured an unrivaled level of peace and social stability.
Such a portrait of the Middle Ages is, of course, highly romanticized (suitably enough), as indeed is Scott's depiction of the Crusades in The Talisman. Current scholarship on the Crusades presents this period of history as problematic, to say the least. Contemporary historians tend to highlight what they see as the imperialist mindset of the Crusaders, manifested in countless atrocities against Muslims, Jews, and Orthodox Christians.
Yet Scott is uninterested in such historical analysis; he simply wants to give his readers a good old rollicking read, packed with adventure, heroism, and a dash of romance. The Talisman is set during the Third Crusade, which was a failed attempt by the armed forces of Christendom to wrest control of the Holy Land from the Saracen warlord Saladin. Much of the story's action takes place in what would now be modern-day Israel, in the Crusaders' camp, where the rival leaders are forever at each other's throats.
Although Scott's motivations for writing The Talisman were undoubtedly to provide his loyal readership with the usually light, undemanding entertainment they'd come to expect from him, the sympathetic depiction of Muslims in the story gives it a certain depth that it would otherwise lack. It's notable, for instance, that Saladin is presented in a positive light, as a man of honor and compassion, who, disguised as a physician, cures the ailing Richard the Lionheart by means of the titular talisman.