The Muslim world is aflame over these words (In bold) in a speech by the Pope. Here is the passage containing the inflamatory quote:

"Without descending to details, such as the difference in treatment accorded to those who have the "Book" and the "infidels", he [Byzantine emperor Manuel II Paleologus] addresses his interlocutor with a startling brusqueness on the central question about the relationship between religion and violence in general, saying: "Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached". The emperor, after having expressed himself so forcefully, goes on to explain in detail the reasons why spreading the faith through violence is something unreasonable. Violence is incompatible with the nature of God and the nature of the soul. "God", he says, "is not pleased by blood – and not acting reasonably – is contrary to God’s nature. Faith is born of the soul, not the body. Whoever would lead someone to faith needs the ability to speak well and to reason properly, without violence and threats… To convince a reasonable soul, one does not need a strong arm, or weapons of any kind, or any other means of threatening a person with death…".

"The decisive statement in this argument against violent conversion is this: not to act in accordance with reason is contrary to God’s nature. The editor, Theodore Khoury, [editor of the text of the dialogue carried on – perhaps in 1391 in the winter barracks near Ankara – by the erudite Byzantine emperor Manuel II Paleologus and an educated Persian on the subject of Christianity and Islam] observes: For the emperor, as a Byzantine shaped by Greek philosophy, this statement is self-evident. But for Muslim teaching, God is absolutely transcendent. His will is not bound up with any of our categories, even that of rationality. Here Khoury quotes a work of the noted French Islamist R. Arnaldez, who points out that Ibn Hazn went so far as to state that God is not bound even by his own word, and that nothing would oblige him to reveal the truth to us. Were it God’s will, we would even have to practise idolatry."

….from Full text of Benedict XVI’s speech in Germany Text, provided by Vatican, includes comments on Islam — http://www.msnbc.msn.com/id/14848884/

Pope Benedict XVI said Sunday that he was "deeply sorry" about the angry reaction to his recent remarks about Islam, which he said came from a text that didn’t reflect his personal opinion. His point would have been better made if he had included references to similar Christian behaviour, such as the Crusades or the Inquisition, where Christians tried to convert Muslims by the sword. The religious wars between Protestants and Catholics in the 15th and 16th centuries seem to me to be very similar to the current conflicts between Sunni and Shia.

Never the less, it seems to me that the current violent reaction around the world proves the point of the quote. Any one who is critical of Islam or speaks out against it is targeted for violence and death threats. Fundamentalist Islam, just like fundamentalist Christianity, is intolerant and violent. Neither is reasonable and open to discussion; both believe they have the absolute truth and unbelievers are doomed.  The Pope’s point – "not to act in accordance with reason is contrary to God’s nature" – just is not reaching fundamentalists of either faith. We need a middle reasonable way to end the current violence in the world. It is unfortunate that so many are missing the Pope’s point.