Hope I thought you taught English? I didn't state that as a fact, I asked you a question?
In such as way as to indicate that you believe that your suggestion is true. That's what comes of beingan English teacher!!
How do you pick out which bits are literally true and which bits are allegorical?
Ever heard of literary criticism, Floo? Using this, one can work out what are historical and therefore literally true, and which aren't. Let's take Genesis as an example. In the Old Testament itself, we are told that the Jewish Scriptures were lost sometime in the 5th/6th century - probably coinciding with the Babylonian invasion - and that on the rediscovery of some of the material, the Pentateuch was rewritten after the people returned from Babylon. As there is no version that predates that time, we have to assume that that is the material that was later translated into Latin, Greek and then English and other languages.
I am not a Hebrew scholar, so I have to rely on those I know who are, and there is sufficient internal evidence to indicate that the rewritten Genesis - possibly other parts of the Pentateuch as well - is not written in the same way as books such as Kings or Chronicles which are generally deemed to be historical.
So, yes, one has to study the material, which is - of course - what Jesus taught his disciples to do and, largely, the motivation for the early 'Protestant' translators who worked to bring the material to their generation in English/German/Dutch/etc.