There is no contradiction here. In order to understand the meaning correctly, one must understand the many dimensions of words like "Kufr", "Kafr", "Shirk", and "Mushrik". For example, in 2:221 "Mushrikat" is severely limited when understood as "polytheistic". This understanding implies that People of The Book cannot be "Mushrik"s for they believe in one God (monotheists), but this is false and we shall see why after we examine the many dimensions of the words in questions, as Bedouin Arabs of the 7th century understood them:
Kufr
- Denial or rejection of the truth
- Concealing the truth
- Ingratitude = Choosing to live in the darkness of ignorance
- Hiding or covering something
- Closing eyes to the light of truth
- Stubborn denial of the truth
- Concealing the truth
- Knowingly oppose the truth
- Uncritical adherence to ancestral views
- Trying to be with the majority without discernment.
Kafir
- One given to Kufr
- One who adamantly denies or opposes the truth
- Commonly translated as ‘infidel’
- Derivatively and positively, a farmer who hides the seed under the soil (57:20).
Therefore, Kufr or Kafir does not apply to the unaware, anyone to whom
the message has not been conveyed or reached.
Mushrik
- Idolater
- Pagan
- Anyone who ascribes divinity to other than the One True God
- Who associates partners with Him
- Who prefers manmade tenets
- Who worships idols in any form such as statues, own desire, forces in Nature, any of God’s creation
- One who uncritically follows what others do
- A blind follower
- One who considers men as authorities instead of the Divine revelation
- Anyone who makes lists of Halaal (permissible) and Haraam (forbidden) from outside the Qur’an
- One who believes in clergy against the Divine revelation
- Who adores saints, political or religious leaders in lieu of God
- Who bows or prostrates physically or mentally before any creation
- Who promotes themes, dogmas and tenets contrary to the Qur’an.
Shirk
- The act of being a Mushrik
- Associating others with God
- Accepting human authorities parallel to Divine revelation
- Sectarianism
- Idol worship in any form
- Being content with man-made systems
- Worshiping graves, saints, ancestors or one's own desire
- Blind following or accepting religious information without discernment
- Failing to use the Divine Word as the Criterion.
Source: The Qur’an as it explains itself (Fifth Edition) p.12-13
Same limitation is applied to "Kafr" which among other things it means "Liar". It's becoming clear now, certainly most People of The Book fall in the traps of "Shirk".
Let's examine the meaning of the verses you quote (not a literal translation):
2:221 (Establishment of an ideal social system begins with the family. For a successful family life, uniformity of purpose is crucial. Therefore, O believing men!] Do not wed Mushrikas till they acknowledge the truth. A believing maid of God is better than a Mushrikah even though she may seem attractive to you. And do not establish marital bonds with Mushriks till they acknowledge the truth. A believing servant of God is better than a Mushrik even though he may enchant you. They invite to the fire, while God invites to Paradise and a well-preserved life by His Leave. He expounds His messages for mankind to ponder and take them to heart.
60:10 O You who have chosen to be graced with belief! When believing women come to you as immigrants, investigate their case, although only God is best Aware of their faith. Once you establish that they are truly believers, do not return them to the rejecters of the truth. They are not lawful for the rejecters, nor are the rejecters lawful for them. Give the rejecters what they have spent on them (as dowry). And there is no blame on you if you marry these women, when you have given them their due marital gift. And do not hold on to wedlock with women who continue to deny the truth. And you may ask them for the dowry you had paid, just as the rejecters have the right to ask the return of what they spent. This is the Judgment of God. He judges between you, for God is All Knower, All Wise.
5:17 They have certainly denied the truth who say, “God is the Messiah, son of Mary.” Say, "Who could oppose God if He willed to annihilate the Messiah son of Mary, and his mother and everyone on earth, all of them?" God’s is the Dominion of the heavens and earth and all that is between them. He creates all things according to His laws. And God has Power over all things and events.
5:5 This Day, all good things of your choice are made lawful for you. The food of those who were given the Scripture is lawful for you and your food is lawful for them. And so are the virtuous, chaste women of the believers and the virtuous, chaste women of those who were given the Scripture before you (provided they do not associate anyone with God 2:221). But you must give them their marriage portions of wealth and property, and live with them in honor, not in fornication, nor as secret lovers. (It must be an honest wedlock 4:24.) Anyone who rejects belief, his work is vain and he will be among the losers in the Hereafter.
I hope this clarifies your confusion. I don't want to make my post too long but I just want to add that everyone deserves a chance. Atheist or mushrik People of the Book - they may not realize their wrong way because of them following traditions blindly. You may be friendly and preach the message of God to everyone. If s/he become a true Submitter to God alone, then s/he is lawful and perfect for marriage. If they continue to be ignorant, stubborn, arrogant, and hypocrites, then they may drag you down to their level!
2:109 Out of envy, many among the People of the Book wish to make you revert back to denying the truth after you have attained belief; even though the truth has become clear to them. Pardon them, bear with them, and leave them with their ways until God issues His decision. God has power over all things, and all events take place within the framework of His laws.
