There's a whole genre (at least one) of phony autobiography, and those who get suckered into believing them often continue to support them even in the face of overwhelming evidence against them. Mike Warnke's book, The Satan Seller, tells of how he was inducted into a coven of Satan-worshippers and became a leader in the group, leading a debauched life before finding God and becoming a Christian standup comedian. The Christian magazine Cornerstone did a comprehensive investigation into his past, and found that none of it was true. Similarly, Cornerstone exposed "Lauren Stratford"'s claim of being raised by Satan-worshippers, forced to participate in sex orgies, and to sacrifice her own child to be the fabrications of a mentally disturbed woman who was raised in a Christian home. Michael Esses told a story of being a God-hating rabbi converted to Christianity in his 1973 book, Michael, Michael, Why Do You Hate Me? John Todd claimed to be a member of the Illuminati. "Dr. Alberto Rivera" claimed to be a Jesuit priest trained to destroy Protestant churches in a story published as a comic book by Jack Chick. Cathy O'Brien claimed in Trance-Formation of America to have been subjected to CIA mind control and made into a sex slave for presidents and celebrities.
The male versions emphasize that the individual involved was a tough guy, a bad guy, and a leader involved in these nefarious deeds; the female versions, by contrast, portray themselves as victims under the control of evil conspirators. In both cases there seems to be an element of pride in the vivid descriptions of the actions confessed--the motivations behind these are no doubt similar to the motivations of false or embellished confessions in rehab and twelve-step programs.
It's worth noting that the same people are behind a number of the Christian fakes--David Balsiger ghost-authored Warnke's book and was director of marketing for the publisher of Esses' book (and has a longstanding reputation for dishonesty), Jack Chick promoted John Todd and "Alberto."
In Frey's case, publisher Nan Talese admits having long-standing arguments with her husband, Gay Talese, about whether "nonfiction" can include fabrications--her husband defending truth in nonfiction while she defends falsehood presented as fact.
Frey, for his part, has admitted that he has taken some liberties, but asserts in the face of overwhelming evidence from The Smoking Gun exposure that his account is still basically accurate.
Why are so many people willing to support and endorse this kind of dishonesty? Some, like Nan Talese, are doing so explicitly--a position that forgives minor distortions, even when they accumulate into major ones. It allows for "bullshitting" and for "noble lies" of the sort the neo-conservatives defend.
I find it fascinating that some of the biggest defenders of this kind of falsehood are people who claim to be absolutists about morality--the only thing that can be said in their defense is that some of them truly believe it and think the exposures can be refuted. Over time, the position can become untenable for most, and the followers of people like Warnke fall away in quiet embarrassment.