Peter -

1) While I cannot claim to have viewed physical evidence such as birth certificates, there are numerous sources that attest to Fischer's mother being Jewish.   Check the Atlantic story that I gave a link to above.

Here is second story, from Knight Ridder -
Knight Ridder story

2) We can argue about whether Yugoslavia recouped the $3 million. Here is a story, with a NYTimes editorial attached that gives further details -
1992 - Yugoslavia


3) Peter, you obviously have an understanding of the history in Yugoslava.   However, In 1991 UN sanctions were put in place against ALL the countries and states of Yugoslavia. In May of 1992 a resolution was passed that blocked economic activities and prevented Serbia / Montenegro from participating in cultural and sporting events. It can also be said the Milosovic

Here is the United Nations webpage that highlights the various resolutions imposed upon the former Yugoslavia:

UN Resolutions

4) Was Milosovic a "monster" in 1992?   I guess it depends on how you define "monster". Read this indictment from the UN, which details their "issues" with Milosovic from the late 1980's until the late 1990's. -
Indictment

4) Turning down $3million is very hard to do. But Fisher turned down other offers in his career. (See the Atlantic article).   The question comes down to - why did he choose to play in Yugoslavia and defy the order? He knew the reprecussions and took the the chance. Now, he has to pay for it.