The Bible is divided into many literary genres, inclusive of, but not limited to:

Historical Narrative
Law
Poetic
Proverbial
Genealogies
Prophecy
Statutory
Apocolyptic
Parables
Letters

I think the idea that the Bible is one packaged gargantuan book is because we are constantly reinforced that idea through...well, it's packaging. Today, we have the Scriptures nicely bound into one convenient book; however, it is not one single book. The Bible is merely the canonical compilation of 66 books for Protestants and an additional 7 for the Catholic. It is important to remember though, that these are all different books. Many of the authors are the same, as many of styles and languages are the same. However, as a whole, it is a combination of literary styles and authors spread over thousands of years written to different audiences and contexts. This last part is paramount, especially concerning culture and assumptions carried within; however, it is also important if the writing is intended for an individual or a community, and secondarily, the question of for the community at that specific time or a teaching or promise more universal. Combine all of this with the fact that these texts are written in Hebrew, Aramaic, and Koine; and further, consider that the New Testament writer is largely writing in his second language and relating to the Old Testament through the Septuagent, which is Greek translated Hebew texts, and things get really, really interesting. It might almost be easier for us if we still had all those separate scrolls and actually read Scripture as they were intended: letters, stories, prophecy, etc...not just jerking a verse from each like they are merely from different chapters from Moby Dick.

So, here is the point.

Q. Is the Bible interpreted allegorically or literally?
A.Yes.

Not one or the other, but Yes. The real question regards what book or section of book are we talking about.

Q. Is a Pauline Epistle interpreted allegorically or literally?
A. Literally.

Within narratives and most other genres, a book will have both allegorical and literal. Remember that one of God's favorite ways to teach His people is through stories. Think of Christ's own teaching during His ministry; He largely used Parables. We see this in both
the Old and the New Testament writings.

Furthermore, there is a very distinct separation of assumption between the way we read things and the way the ancient Jew read things. This sounds really strange to us, but the ancient Jew really wasn't as concerned with detailed facts. Truth is not communicated through the specific numbers of army personnel or a literal number of days of Creation (Aside: which itself requires our own interpretation shifting from God's perspective to that of man, based on a unit of time tied to the Sun, which wasn't even created until the second half of the process - the fourth day...if we're being literal...), etc. The point of such stories is that God conquers for man when the situation is impossible for him and that God created everything. Again, this was story telling. Think of every culture of oration. One generation would tell the story to the next, and they would pass those same stories to their own children. (Aside: remember how Israel would fall away because one generation didn't pass on the stories of their fathers to their sons...) These stories were not recorded until much later than their origination. This is just a small part of the context. It is one of story telling and the truth being larger than the details or specifics...these merely set the stage to communicate such truth. It is very difficult to communicate how different ancient Jews (and all peoples) would look at truth and avail themselves to it compared to us. It might be easier for us to return to parables. Is the truth communicated within stories of The Good Samaritan or The Prodigal Son found in the specific historical referents? We certainly hope not, but we also know not. It seems incomprehensible for us to say there is not the truth of God in those stories because they didn't actually happen in history. These are perhaps the two most preached stories of the New Testament! Think about it. There is not historical basis at all for these events, yet the truth is so powerful that we preach these stories more than the rest. Still, we are able to muster so much angst over mere details of Old Testament stories told to the ancient Jew. Amazing. God story-tells both through Christ and His Spirit, each read within Scripture.

As such, our current age bickers about and attempts to reconcile points of the Old Testament that don't add up or are merely controvertible, and we try to explain them away. Well, they're there, and to be honest, they don't matter. It's the truth behind the story that matters. Much of this tension is also seen between different camps of interpreting Revelation, which again is missing the point largely. Sadly, few people, including many pastors, have been educated and trained in this and other parts of Biblical Hermeneutics and Bibliology as a whole. So, we get bent out of shape and take our eyes off of what matters. We preach sermons that if you don't believe in a literal 7 day creation then you don't believe the Bible is true, and then logically, you can't trust when Paul says that everyone who calls on the name of the Lord will be saved. We're back to either the Bible is blankety allegorical or literal. Either/Or. There were exactly "x" number of troops in the Israelite army, or Christ really didn't rise from the dead...he was just maybe asleep or something. This is the horrific tragedy from pastors who don't know or at least don't consider at all how the Scriptures relate. In their irresponsibility or mere ignorance, they cause their parishioners heartache in having their foundations of faith rumbled every time someone questions Jonah or asks if Adam had a belly button or enjoyed the massive incest to populate the earth. You see it not only in direct sermons on topics such as above but also in how they search for biblical support for their whimsical sermons. Such is a great hardship on the Body of Christ. Let us then hope for better effort and teaching from our pulpits and lectors, for so much that is truly consequential is subconsciously communicated and ingested into the parishioners' basic assumptions by way of merely the manner of argument in which the cleric sermonizes his thesis, if such thesis is itself not disastrous.