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Some thoughts from "The meaning of Jesus, two visions" by Marcus Borg and NT Wright.
One of the key points of difference between liberal and evangelical scholars is what you can take as 'literal'. There are, like most things degrees or even aspects in which the Bible and related stories can be taken as literal.
Marcus Borg makes the point that we really don't know a lot about Jesus. What we do know of him comes from writing that occurs decades after his death. That the writing where done by his followers after his death. Where in their writing crept connections with the Telmuld and other Jewish literatuere. That during the passing on orally of the stories for decades the legend of Jesus increases by his followers. You can see this progression chronologically with Mark and the Gospels of Mathew and Luke then John.
For me it makes seems to make scene, I can actually see what he is talking about. Chinese whispers
The other option put forward by NT Wright is that the oral tradition is incredibly accurate. That the gap between Jesus death and the writing of the Gospels is nothing to worry about. Especially in a Jewish context.
Once a story has taken hold of people's minds and imaginations, it is told again and again with minimal alteration.
For me either position can be ok, ultimately a story does not need to be literal for it to contain truth! Even fundamentalists use illustration in their preaching with stories and illustrations (not in the Bible) which may not be literal but bring out the truth of the Bible.
Just to let you know I've done a review of the book which can be found on hubpages here.