12th Century literacy
The majority of the 12th century populace was illiterate. This was not something imposed by the upper classes upon the lower, but instead simple a consequence of literacy being of little use to farmers and suchlike, and not worth paying for.
For those who were well to do, but not noble, occasionally schools would be run in town by clerics for a small fee. These would teach only the basics of learning. Boys who learnt well here could go into the clergy and follow a variety of lifestyles from itinerant preacher, monk, teacher or pursue a career in academia if their skill was sufficient to attract a patron.
Nobles (or presumably anyone else with such a large budget) could employ a tutor to teach individual children or small groups of children. Noble girls and boys were taught alike, often the noble girls ending up with a better level of literacy than the boys who left early to become knights.
12th Century Literature gives examples of noble ladies reading from books as a commonplace thing. Possibly such ladies read more widely than their male counterparts, who may have considered reading a waste of time unless they were a scholar.
Literate persons in England and France could read and speak French (whether Anglo-Norman or continental dialect) as well as Latin. Often reading would be done aloud (even when alone) rather than silently, but this was not a sign of lack of literacy, meerly of different cultural rules in a society where reading was rarer. Running one's hand along the line to follow the words would not be unusual even in a well educated monk, but again, this does not imply a lesser reading skill - after all the reader was probably translating as they went - merely that with so many less books available than are today, speed reading had no reason to develop, and 12th century scholars could take more time to understand a piece of writing.
The question of literacy in England at this time is a very complex one, starting with how one defines literacy. For those interested in the subject, M.T. Clanchy's "From Memory to Written Record: England 1066 - 1307" is highly recommend.