From CNN.com today:
Archaeologists find evidence of Babylonian conquest of Jerusalem -- as told in the Bible

This sounds like huge news, but it's actually not.  The Babylonian conquest of Jerusalem was never really in any doubt to begin with.  The Old Testament account of the fall of Jerusalem lines up pretty much exactly with our accounts from other historical sources.  (For more information on this, see The Unauthorized Version: Truth and Fiction in the Bible by Robin Lane Fox.)

It is a point worth remembering, however. These days, I sometimes feel like half of my conversations about the Bible are defending it against hardcore atheists--people who don't want to credit the Bible with any historical accuracy.  But these people are just as wrong as the hard core Christians who claim that there aren't any errors in the Bible. There is actually a lot of real history in the Old Testament, but it is mixed up with mythology and religions polemics.  Separating the two can be tricky, but also fascinating.

My understanding is as follows:
Story of the Patriarchs, the Exodus, and the Conquest of Canaan--Pure Mythology.  No historical value
Ruth--Historical fiction.  It was a later addition to the King David legend, which was meant as a rebuttal to the racial purism that had developed in Ezra and Nehemiah's time.
King David--Possibly historical (For more discussion see HERE).
1st and 2nd Kings-- History re-arranged to fit a religious polemic, but based on real historical events.  The closer we get to the fall of Jerusalem, the more accurate it becomes
Esther and Daniel--Historical fiction.  The settings are historical, and most of the kings were real people, but the story is fiction
Ezra and Nehemiah-- authentic historical documents, that have been mangled by and chopped up carelessly by later editors

...and actually while I'm on the subject...
I was meaning to link to this ages ago and never got around to it, but my old pal Phil Christman has published a review of the Old Testament.  Or as he puts it, "I reviewed the FREAKIN’ BIBLE, no big deal".

It's available at the Plough:
Poetry and Prophecy, Dust and Ashes: A review of The Hebrew Bible: A Translation with Commentary, by Robert Alter Reviewed by Phil Christman
(The beginning of the essay is a review of the specific translation, but it then turns into a review of the Hebrew Bible generally).

Phil's essay has been attracting attention from a lot of different corners.  Arts & Letters Daily plugged it.  Whisky Prajer also highly recommends it.

I agree with half of Phil's review, and disagree with the other half, but I will resist the urge to comment on every line of the review.  I'll just say that I enjoy reading Phil as always.  He is one of those writers who has the ability to make his thought process clear to his readers, and even when I don't agree with him, I love being able to see what his thought process is.  There's nothing I like more than enjoying a morning cup of coffee and reading Phil's latest post.