Final answer:
Sir Walter Scott, the author of Ivanhoe, was the Scottish novelist who inspired Washington Irving to delve into German Romantic literature and folklore.
Step-by-step explanation:
The Scottish novelist who encouraged Washington Irving to read German Romantics and to make use of folklore and legends was Sir Walter Scott, best known for his novel Ivanhoe.
Irving was an American writer, and his acquaintance with Scott led him to explore the rich vein of folklore and legend that would heavily influence his own work, such as The Legend of Sleepy Hollow.
Walter Scott's historical novels, especially works like Ivanhoe and Rob Roy, were steeped in the chivalry and national pride of Scotland, commingled with a rich tapestry of folklore that would inspire Irving's interest in American tales and legends.