In Naruto Shippuden during the fight of Itachi (Edo) and Sasuke vs Kabuto, Itachi places Izanami on Kabuto. In the end of the fight Kabuto releases Itachi. Then Sasuke and Kabuto go their own ways. Why don't they attempt to kill each other? I am not sure whether Kabuto still wanted to kill Sasuke after the fight but Sasuke definitely had no good reason to trust Kabuto. Is Sasuke simply afraid of getting killed by Kabuto?
Sasuke doesn't try to kill Kabuto for three reasons:
- He was following Itachi's lead.
- Kabuto was already defeated.
- He didn't encounter Kabuto again until Kabuto was reformed.
While fighting, Itachi comes to sympathize with Kabuto, because of the similarity between their lives. They were both spies, with betrayal as their forte, erasing their identities and allegiances, hardly aware of who they really were as a result. When Itachi traps Kabuto in the Izanami, the battle is finished. Kabuto cannot escape the jutsu until he chooses the path of reformation. Itachi also manages to get Kabuto to release the reanimation jutsu. There is no need to kill Kabuto at this point, and Itachi thus won't kill him.
Sasuke is following Itachi's lead. Though for most of the series, Sasuke hates Itachi for killing their clan, his hate returns to love again once he learns Itachi's reasons for destroying their clan (and after killing Itachi), and he seeks revenge on the Leaf Village for betraying Itachi, mainly out of his love for Itachi. Thus, Sasuke is swept away by Itachi's return, even going so far as to switch sides and help Itachi defeat Kabuto. Sasuke is unlikely to disregard Itachi's decison to leave Kabuto alive and thus doesn't finish the job even after Itachi disappears.
Finally, Sasuke doesn't pursue killing Kabuto at any time afterwards because the next time they meet, it is as allies. During the war, when Sasuke is injured, Kabuto shows up and heals him (see section Birth of the Ten-Tails' Jinchūriki on Kabuto's wiki article). Kabuto chose to accept the path Itachi left for him, and thus is reformed and an ally. Sasuke does have good reason to trust Kabuto, because Itachi's Izanami left no other option but for him to become someone Sasuke can trust (aside from staying trapped in a time loop forever), and Kabuto healing him is proof of this. At this point, there is no reason for Sasuke to kill him.
As these episodes have begun to air in the English version on Toonami in the United States, I've gleaned some additional information from rewatching them. Particularly, my statement that Sasuke's hatred turned to love may be a severe oversimplification. After watching the episode where the battle begins, I can more accurately explain why Sasuke decided to fight against Kabuto. This is only peripherally relevant to the question, but I'll include it anyway, as I believe it will be of interest to readers.
The episode in question is The Risks of the Reanimation Justsu. When Itachi and Sasuke arrive, Kaubto seems to believe Sasuke will side with him, but Sasuke makes this statement to Itachi, after Itachi blocks his shuriken:
"He's just like Orochimaru, which makes him my enemy. Right now, he's your enemy too, isn't he?"
This simple statement explains why Sasuke is against Kabuto, but there is additional information as to why Sasuke sides with Itachi. He says to Kabuto,
"I only came here chasing after Itachi so that I could talk to him."
Sasuke and Itachi seem to reach an accord that Itachi will answer his questions after the battle. The accord exists in Sasuke's mind, at least; Itachi's responses seem a bit shifty. Sasuke seems to understand this, as he later says,
"Itachi, you always kept lying to me; saying things like 'Next time' and 'Later', and then you died on me. So this time for sure; I'm going to hold you to your promise."
(Excuse the odd punctuation; I'm doing my best to capture the nuances of the statement, but I only have so much grammatical knowledge).
This explains why Sasuke sides against Kabuto and why he sides with Itachi. There is an additional quote in here that is directly related to the original question: After Sasuke asks Itachi why he stopped his shuriken (the first quote), Itachi gives Sasuke a direct order not to kill Kabuto:
"I hear you, Sasuke. And we will talk later. First we need to take this one down. But don't kill him. If you kill the caster of the Reanimation Jutsu, it can never be undone."
Itachi further gives his battle plan to Sasuke, which Sasuke seems to non-verbally acknowledge.