Does God forgive those who believe in Him but do not believe in Muhammad as a Prophet, such as the People of the Book, knowing that God does not forgive polytheism but forgives what is less than that to whomever He wills?

The faith of one who believes in Allah but does not believe in all the Prophets is not valid. For among the pillars of faith are belief in Allah, His angels, His books, His messengers, the Last Day, and divine decree, both its good and its evil. So whoever disbelieves in any of these pillars, or denies the message of Muhammad (peace be upon him), or associates partners with Allah, or commits any of the nullifiers of faith after having entered into it, he is unforgiven and among the people of Hellfire. The Quranic verse, "Indeed, Allah does not forgive association with Him, but He forgives what is less than that for whom He wills," encompasses all disbelievers and polytheists.