Does Islam Believe Jews and Christians Are Saved?

Does Islam believe that Jews and Christians are saved? That question has been in my mind as I've gone through the Koran. I'm not really in the mood to comb through everything I've read, so I'm lucky I found the dichotomy in Islam on the same page. The Koran translation is from my BibleWorks.

On the one hand, Islam is open to the possibility that Jews and Christians will be saved:

Sura 5:69: "Surely those who believe and those who are Jews and the Sabians and the Christians whoever believes in Allah and the last day and does good-- they shall have no fear nor shall they grieve."

On the other hand, Islam (much like the Hebrew Bible and the New Testament) portrays Israel as unbelieving:

Sura 5:70-71: "Certainly We made a covenant with the children of Israel and We sent to them apostles; whenever there came to them an apostle with what that their souls did not desire, some (of them) did they call liars and some they slew. And they thought that there would be no affliction, so they became blind and deaf; then Allah turned to them mercifully, but many of them became blind and deaf; and Allah is well seeing what they do."

According to this passage, many Jews are spiritually blind and deaf.

And what it says about Christians is much worse:

Sura 5:72-73: "Certainly they disbelieve who say: Surely Allah, He is the Messiah, son of Mar[y]; and the Messiah said: O Children of Israel! serve Allah, my Lord and your Lord. Surely whoever associates (others) with Allah, then Allah has forbidden to him the garden, and his abode is the fire; and there shall be no helpers for the unjust. Certainly they disbelieve who say: Surely Allah is the third (person) of the three; and there is no god but the one God, and if they desist not from what they say, a painful chastisement shall befall those among them who disbelieve."

In this passage, Christians who believe in the trinity are going to hell.

Is there a way to reconcile these passages? Maybe the more "open" verse is saying that Jews and Christians will be saved if they embrace Islam. Sura 5:74 exhorts Christians to seek God's forgiveness, and v 77 states:

"Say: O followers of the Book! be not unduly immoderate in your religion, and do not follow the low desires of people who went astray before and led many astray and went astray from the right path."

This verse tells Jews and Christians to reject the "errors" of their own religions, which presumably means "embrace Islam."

We see later on that the Koran wants Jews to believe in God and the Prophet (Muhammad):

Sura 5:78-83: "Those who disbelieved from among the children of Israel were cursed[;] this was because they disobeyed and used to exceed the limit...You will see many of them befriending those who disbelieve; certainly evil is that which their souls have sent before for them, that Allah became displeased with them and in chastisement shall they abide. And had they believed in Allah and the prophet and what was revealed to him, they would not have taken them for friends but! most of them are transgressors. Certainly you will find the most violent of people in enmity for those who believe (to be) the Jews and those who are polytheists, and you will certainly find the nearest in friendship to those who believe (to be) those who say: We are Christians; this is because there are priests and monks among them and because they do not behave proudly. And when they hear what has been revealed to the apostle you will see their eyes overflowing with tears on account of the truth that they recognize; they say: Our Lord! we believe, so write us down with the witnesses (of truth)."

According to this passage, Jews are unbelievers who ally themselves with pagans against the Muslims. But the Koran acknowledges that there are some Christians who are actually open to what Muhammad has to say. Salvation appears to rest on one's acceptance of God's messenger.

What's happening is that Islam, Christianity, and Judaism were competing religions. While Islam may have been tolerant to the "people of the book" when it ruled in medieval times, my impression is that it felt Jews and Christians should embrace Muhammad, which (for Muslims) is truly believing in God and the last day.