The original meaning of the preposition dē in Latin was “out of somewhere distant, toward the speaker”. It later came to encompass the whole ablative case. While it had a greater field of application, the core business of the ablative case was a concrete one: the idea of spatial separation and removal.

You can see it very well in Modern French sentences such as “On rentre de la cafèt” or “Cette pierre provenait de la carrière de grès voisine”, which both involve movement away from a point of origin.

As you surmise, “citer de mémoire” evokes the idea of the quote being pulled away from the memory of its speaker (its origin) and brought forth into speech. The English “from memory” is no different.

This contrasts with sentences such as “Il est aimé de tous” or “C’est la soeur d’Anita” where the ablative meaning is absent and the preposition is empty of sense and arbitrary.

(I realise I probably just summarised the contents of your article)

1. L’idée que la mémoire est un endroit, ou un lieu, duquel on peut extraire les renseignements est ancienne. C’est réifié en des techniques mnémoniques, comme L’Art de mémoire (Notez ici que la référence en anglais est plus informatif).

The idea that memory is a place from which information can be retrieved is an ancient one. It has concrete expression in the mnemonic techniques of e.g. the method of loci.

2. From the same source Casad p.359 (from Google Books)
   

   “The figure is an object whose location is being described and the ground is a second object or location with reference to which the figure is located.”

Coupling that with your quote from p.361 indicates that when the text talks about a source use it is refering to the use of de to indicate that some fact or poem or dream originates or is sourced from memory. So, yes mémoire would be the source, or in the text’s terminology the ground.