You see Islam has this neat thing called abrogation(replacing a verse with a more 'authoritative' one) which is accepted by ALL major schools of Islamic jurisprudence.

(They have to because the Quran is not in chronological order ie the Medina period when Mo was powerless & weak,hence all the "nice" suras versus the Mecca period when Mo was strong)

This is the verse you speak of with the recognised replacement verse

There is no compulsion in religion; truly the right way has become clearly distinct from error;


So when the sacred months have passed away, then slay the idolaters wherever you find them, and take them captives and besiege them and lie in wait for them in every ambush

[link to www.thequran.com]