Abdel Rahman's Defense:

Read the verse in Arabic,
It refers to them as Awliaa, and what is the wali in Arabic? Does it really translate to a friend? Look it up in the Arabic dictionary.
The meaning of the aya is to not look to a Christian or a Jew for help or comfort. They are more likely to combine against you than to help you. And this happened more than once in the lifetime of the Prophet, and in after ages again and again. The reference is political and not personal. There are several instances in history were the prophet signed peace alliances with Jews and Christians and they both violated the treaties, perhaps the most famous one is "Soul7 al 7oudaybia" where the Jews came to sign a peace treaty but planned to assassinate Muhammad during the deal. Naturally, he wouldn't turn to trust them, that's what the aya is about. If you relied on me and I failed you, would you still look for comfort or for help? Of coarse you wouldn't.

It is not racist by any form, pick your word accurately, because it would have to refer to a race in order for you to say so. But it is referring to the two religions (not race)in a political context.

It does not have anything to do with tolerance. Christians and Jews both lived la vida loca under Islamic ruling (nothing of the current rulings, and nothing like Taliban) more then any other faith. In Spain during the crusades, who did the Jews run from and who did they seek refuge in?

It has to do with trust, just like a mother teaches her son not to speak to strangers, strangers could be good or bad. But because she doesn't know, and she wants to assure the safety of her son, then she is better to tell him not to deal with the foreigner.

The aya is about prudence. I hope you understand. I feel that you are not using the right source of translation.

Ciao!
Abdulrahman :)