What's true? Did Cephorus Septim I have no children or wife or did he? According to The Wolf Queen he was married and did have children but according to Brief History of the Empire he did not.
Same with Pelagius III. In The Madness of Pelagius it is said that his mother was a Direnni and his father, Magnus, was king of Wayrest. While according to The Wolf Queen his mother was Hellena Queen of Lilmoth and his father was King of that city.

Which do I believe? Or are they specifically meant to be contradictory?

The queen might have been a Direnni, as the Septims married into powerful elven clans quite a bit.

The Queen is from Cyrodiil atleast, quoted from the book:

'Magnus had married Hellena, the Cyrodiil Queen of Lilmoth -- the Argonian priest-king having been executed -- and was representing the Imperial interests in Black Marsh admirably.' -The Wolf Queen, Book Four

However, this just makes things worse. This is probably one of the biggest unexplained contradictions to date, as The Wolf Queen tells a very differnt account to version in The Madness of Pelagius, as it's not just the parentage that's an issue, as if you read The Wolf Queen, it's very clear that both Magnus and Hellena are in Black Marsh (and Potema brings her armies through the swamps to attack him there), and it's there, not Wayrest that Potema attacks King Magnus with her armies. Not to mention in The Madness of Pelagius, his mother is called Utheilla, not Hellena; it's pretty clear his mother in both the accounts are completly seperate women.

However, The Madness of Pelagius is historical non-fiction, while The Wolf Queen is historical fiction, so The Madness of Pelagius should come out on top, but because the differences are in the extreme, one would be lead to beleive this may stem from inconsistencies with the Devs.

Remember, they are books in game, and arent 100% accurate, just like some books in our world arent.

Mistakes in research, or poor research by the authors can lead to wildly varying events within the books. And lets face it, in their period of time, an editor/publisher doing fact checking may not 1) exist 2) have a really really hard time and 3) may be to lazy to bother at all.

Oh, I've reserched this a bit not long ago. Accroding to The Wolf Queen Pelagius III was born in 3E 125, while in The Madness of Pelagius date is his birth is 3E 119.
Year 3E 119 also pointed in A Brief History of the Empire, and Biography of the Wolf Queen. And year 3E 125 never mentoned anywhere except The Wolf Queen.
Furthermore, in Holidays of the Iliac Bay mentoned that Pelagius was a prince of Wayrest.

So I suppose that information in The Madness of Pelagius is true, as it concured with other sources.

I think that The Madness of Pelaguis is true, if just for that it can be found on the desk in the shivering isles. If it's good enough for Haskill and Seogorath, it's good enough for me.