How does Allah judge between the People of the Book and the polytheists who perform good deeds in this world? And will they only be rewarded for that in this world, and have a painful torment in the Hereafter?

Unbelievers will not be rewarded for their good deeds in the afterlife as long as they die in a state of disbelief, because Allah Almighty says: "If you associate others with Allah, surely all your deeds will be in vain" and "And whoever of you reverts from his religion and dies while he is a disbeliever - then those have wasted their deeds in this world and the Hereafter." So Islam is a condition for the acceptance of righteous deeds, and the deeds of disbelievers are rewarded only in this world. Some disbelievers may be punished in this world due to the intensity of their disbelief, or perhaps so that they may repent. As for the Day of Judgment, everyone will be gathered into Hell.