From reading a lot of S.T. Joshi’s biographical work about Lovecraft, Lovecraft’s major malfunction seems to be that he was a geeky, gothy, repressed kind of guy who had a tough time making friends in person, and so consequently did so by correspondence and membership in various amateur periodical associations.
'Zines, in other words. And snail mail.
This is how he got acquainted with his future wife, as well as a great many lifelong friends. After he got married and moved to New York, he developed a somewhat more cosmopolitan viewpoint, but still had a heck of an attitude problem. He didn’t like New York, and he still didn’t much care for “foreigners.” The word “provincial” describes Lovecraft fairly well, and he actually wrote a poem, IIRC, in which he denigrated black folks, whom he considered a less evolved form of human. The N-word features prominently here.
He really didn’t start growing up, as far as his viewpoint and attitudes went, until he was well into his thirties, after his divorce (and subsequent return to Providence, R.I., with tail between legs). Afterwards, though, in his correspondence, he pondered what an idiot he’d been in regards a lot of his previous beliefs about race, nationality, and politics, and did a lot of traveling and meeting folks he’d only known by mail. He kinda blossomed, then.
Unfortunately, he would then get intestinal cancer and die, at the age of 48.
His wife was Jewish, as were some of his chums in New York. As far as I can tell, he was okay with them because they didn’t ACT Jewish, so to speak. Lovecraft liked people who acted more or less like New Englanders. It didn’t help that while he and his wife lived in New York, they hit rough financial straits and wound up living in Red Hook, a low-income neighborhood in which a great many immigrants lived and worked and insisted on hanging onto large chunks of their own cultures. This apparently bugged Lovecraft to no end; many of his stories deal with “degeneration” of human beings over time and generations, caused by depravity or crossbreeding with “lesser strains.” Easy to see where someone could draw the Nazi connection.
He did ghostwrite one story for Houdini, as far as I am aware – Imprisoned With The Pharaohs, published under Houdini’s name in Weird Tales, the magazine Lovecraft published most of his material in. However, Lovecraft and Houdini never met, or corresponded with each other, that I know of. The editor of WT knew that Lovecraft was perpetually short on cash, and asked him to ghost a spooky story out of an anecdote that Houdini had spun while out to lunch with said editor.
Durned if I’ve ever heard that he spoke German, though, much less ever read Mein Kampf. I have no idea if there’s any truth to it, but it seems kind of unlikely.