When (and if) to translate special terms of a certain trade - and, in general, when and if to use foreign words at all - is a very broad and ongoing discussion and i want to warn you up front that i can describe this topic only from my point of view - which is not neutral at all because i have an opinion myself about this.
But, first off, let us clarify: the discussion which takes place in IT is NOT about foreign words, it is solely about english words. The people insisting on the use of "Bibliothek" - which is greek ("η βιβλιοθήκη") - instead of "Library" (which is english of latin origin) won't use the real german "Bücherei" instead of "Bibliothek" at all.
Why to Translate Everything
Many times foreign words are not used because they have added meaning but because using them is somehow perceived "cool". I remember sitting in the ICE and overhearing a guy talking on the phone:
... und nach dem Breakfast Meeting da haben wir die Local Markets gepollt und diesen Input dann in den Spread Sheets processed...
Quite honestly: i heard that and asked myself what he tries to cover. This is a sort of language where one can't tell any truth and lying is the default.
But then, using words out of context because they are perceived as "cool" does not only happen to foreign terms. I live in a social cesspool and often hear "krass" and "konkret" being used like:
Weiß'du, Alda, hab isch krasse neue BMW, hat konkret zweihundatfuffsich PS, i schwör!
(In case you are wondering if i overdid it: this very sentence i heard about a week ago while waiting in a Kebab restaurant.)
Why Not to Translate At All
Every trade develops its own specific vocabulary. Often words are not used with the same meaning they have in everyday speech. These different meanings are often quite (narrowly) well-defined and translating them would take away from their special meaning. German physicians talk about a "Luxation" rather than a "Umrichtung" and a "Fraktur" rather than a "Bruch". The reason is that "Fraktur" and "Luxation" have very precise definitions every physiscian is aware of whereas "Bruch" and "Umrichtung" don't.
The same is true for IT and its - because of historical reasons english - termini technici. For instance, the usual translation of "device" is "Gerät" - because the german doorstopper magazine Computerbild created that "translation" and later Microsoft adopted it for their toy OS. But if you take a look into a dictionary (for instance: here) you will find for "device":
...and so on. I once wrote an article in the german Wikipedia about /dev/null and called it a "device". The discussion went like this:
.../dev/null ist ein Device ....
Nein! Das heißt "Gerät"!
Aber es ja gar kein Gerät!
Na, wenn es kein Gerät ist, dann ist es ein virtuelles Gerät!
The reason is that creating an entry in the /dev tree and having methods of accessing the device like a file is indeed a "device" but the translation for such a feat of artistic brilliancy would rather be "Kunstgriff".
What to Do and When to Do it.
The austrian poet Karl Kraus - often attacked for his use of foreign words - once put it like this (i am paraphrasing here):
Man soll nicht von Kretins sprechen, wenn man es mit Trotteln zu tun hat [...] andererseits hat auch ein Fremdwort seinen Reiz und speziell die Farbe der Stupidität wird weder von der Einfalt noch der Dummheit vollgültig ersetzt.
One shouldn't call them cretins when dealing with putzes but on the other hand stupidity cannot be replaced in every nuance by neither the simple-mindedness nor the oafishness.
What he polemically suggests here is actually sound advice: don't bother to use foreign words if they do not add meaning to your language. Don't be shy to use them, though, if they do.
For your case of "library" in an IT-context that means: "library" is part of the the IT jargon and denominates a certain device. Its meaning is well established within IT folk. For the suggestion to use "Bibliothek" as translation: see above. You would just replace an english term with a greek term and the german "Bücherei" would not be understood in this context at all.