Yeshivat ATERET COHANIM is presenting a nice video about Jewish life in the Muslim Quarter of the Old City of Jerusalem. Maybe I shouldn't say "Muslim Quarter", as Jerusalem belongs to the Jews. However, this is the status today and will be until Meshiach comes.
The video shows you that Jews were always living in Jerusalem's Old City. Somewhere I even heard the Neturei Karta claiming that in those early days of the 20th century, Jews and Arabs used to get along peacefully. As a matter of fact, this is not true, as there were always tensions and in 1920 and 1929, Arabs started rioting and killing many Jews. In the Old City, in Safed and in Hebron.