He buys only books that cost either $1, $2, or $7

Target question => How many $7 books did he buy?

Statement 1 => Mr Smith spends $24 on bargain
There are several combinations that make up $24
($7 * 4) = $24 or ($7 * 3) + ($1 * 1) + ($2 * 1) = $24
So total number of $7 books is not definite so statement 1 is NOT SUFFICIENT

Statement 2 => Mr. Smith buys a total of 10 books
There several combinations that will make up a total of 10 books as well so statement 2 is NOT SUFFICIENT

Combining both statements together =>
From the information in statement 1 and 2, we are looking for 10 books that will cost $24. There are still several combinations to this such as;
($7 * 1) + ($2 * 8) + ($1 * 1) = $24 or
($7 * 2) + ($2 * 2) + ($1 * 6) = $24
From these combinations of 10 books that cost $24, total number of $7 book is not definite so both statements combined together ARE NOT SUFFICIENT

Answer = E