Why is the pinyin for 须 written xu but makes the sound as if its the u from nv?

Yes... That is correct. The initials "x, j, and q" when followed by the "u" final are all pronounced like the "v" final (the u with the umlaut over it). This is because all of those initials require a forward position of the tongue in the mouth. In fact it is impossible to pronounce those initials correctly when combined with the u final (I just tried like 10 times). I guess the reasoning is that adding the umlaut is redundant and assumed... Personally, I would prefer always having the umlaut just to reinforce the pronunciation. Does that make sense?

I find xu just as easy to pronounce as xv, hence my problem (: I never had the problem until I got to this word (:

Oh, yea and I am sure just another reason why I need to hurry up and learn bopomofo

The fact that you find pronouncing xu and xv equally easy implies that you're not really differentiating between the x and sh initials - u can only follow sh, and v only x, by nature of the position of the tongue.

Or, without consciously realizing it, you are quickly changing the position of the tongue to attain the u sound - a good practice exercise is to form x and switch back and forth between the i and v finals, moving the lips but not the tongue (these being the only vowels that directly follow x).

I've had a couple native speakers tell me that the only real difference between the initials 'x' and 'sh', 'j' and 'zh', and 'q' and 'ch' is that they indicate the way you pronounce the different vowels, i.e. the differences between the 'i' of 'xi' and 'shi' (for example) and the 'oo' and 'ü' sounds of the 'u'. However, they weren't linguists, which means that they might not have known properly.

Also, remember that half of the mainland mixes up 'f' and 'h' initials, uses the exact same phonotactics for 'l' and 'n' initials, and has to use hand signs to communicate 四 as opposed to 十 and vice versa. In other words, if your near-identical initials like 'x' and 'sh' aren't differentiated, it's probably not a big deal unless you want to get on TV like 大山, as long as the vowel sounds are pronounced properly.

yeah the 出去 always gets me...
so its actually chu qv, makes sense

As a non- linguist, non- speech specialist, non- native speaker.. take this for what it's worth:

For mainland- standard Chinese, what I've learned and what helps me with this confusion is that zh, ch, sh are pronounced with the tongue curled, tip up (and further back as trauba says) just like a native English speaker would. On the other hand, j, q, x require the tongue to be flat and nearly against the roof of the mouth (and forward as trauba writes).

This works for me unless I am lazy and the j becomes zh, the x becomes sh and the q becomes ch with the accompanying sloppiness in vowel sounds. It seems that the regional variations allow for a range of pronunciation in the initials (the consonants) but much more strict about the finals (the vowels).