Pagination on 2nd loop

The issue is that before your custom queries load, WordPress runs the main taxonomy query (all results in that tax term, 10 per page). On page 6, the main query is trying to load posts 51-60, and since they don’t exist the page 404’s before you have a chance to load your custom query.

Customize the main query using the pre_get_posts hook so that the second loop you’re doing is the main query. Add this to functions.php: https://gist.github.com/1616098

Then for your second loop, just do:

if( have_posts() ): while( have_posts() ): the_post();

More information: http://www.billerickson.net/customize-the-wordpress-query/