Been hit with this question in class and on the web.
X is the first letter of the transliterated Greek word for Christ. So, for centuries, millenium, X was a shorthand form of Christ.
When the first Xmas began to be used, it was not intended to take Christ out of Christmas. It was intended to be a shorthand for Christmas, because the newspapers (where it started) needed a shorter form for headlines.
Xian would thus be a short form of Christian.
I use shorthand in my life all the time. So do most people, especially on the net, even if they don't know it.
lol is shorthand. btw is shorthand. X is shorthand. They all mean something specific.
Now, they all may be used to mean other things. I don't know what else lol is used for, but long before the net was in widespread use (back when a computer took up an entire building and used enough electricity to run a city) btw stood for between. It still does when I'm handwriting notes. X also means ten. And some people have taken it to mean something else. But just because someone uses it for something else, doesn't make its original, intended meaning less valid.
So, yes, Xian means Christian. And no one's trying to hide their religion when they use it. And Xmas doesn't take Christ out of Christmas. Unless you're trying to leave him out, in which case it doesn't matter what you call it.