Why did Nintendo never fight him? He had no case, he was far from the first magician to "bend" spoons. Nintendo could have easily defeated him in courts.

No special insider knowledge, just speculation: in 2000, when the injunction was filed, Pokémon was an absolute juggernaut at its arguable cultural peak worldwide. The 2nd movie was out that year, as where the game sequels which also carried much of the Game Boy Color sales.

So here comes a famous Jewish celebrity from Israel, claiming the lightning bolts on the Kadabra character (whose Japanese name sounds similar to the guy, and who shares a stage magician gimmick) are a reference to Nazi Germany's Waffen SS logo(see source from 2000 here).

That's a really bad assertion against your children's franchise if it makes headlines, even if it's a spurious lawsuit. It's probably just easier to take 1 card out of print rotation and maybe settle things out of court, behind closed doors.
Back in the day Uri Geller was an influential celebrity, and he never stopped being good at grabbing headlines (recently he claimed to use his psychic powers to stop Theresa May from completing Brexit, which I suppose in a way did occur? lol).

The Pokémon Company were very protective of that brand already back then. In 2000 Jynx's design came under fire for blackface & a voodoo name, and she was changed quickly.
When ~700 kids got seizures after the 1997 Porygon episode they made sure the episode would never air outside of Japan, and Porygon was never seen in the anime again. They also pulled the Safari Zone episode for implied gun violence, and post-9/11 the Tentacruel episode was taken out of syndication. Heck they cut the opening to the first movie because they thought "cloning" would offend Christian audiences.

So yeah I think the company had a pattern of playing it safe, and dropping 1 card was probably easier than a potentially protracted lawsuit (even if they would eventually win it).

That's a really interesting speculation. Is it your own?

Yeah just me spitballing based on a few observations.
Did a bit of googling though and here's something which throws a wrench in my theory: this PokéBeach interview appears to indicate there was ongoing legal action of some sort all the way into 2008. Which would mean The Pokémon Company (and/or Nintendo?) were in some sort of continued contact with Mr. Geller for a solid 8 years minimum.

Not a lawyer, so if true I'm not sure what to make of that. But perhaps TPC/Nintendo put up more of a fight than I thought?