"Indeed, Pelinal Whitestrake, Nibenay warlord of the Elven Pogrom, mistook the khajiit for another strain of Aldmeri and killed many of their number before realizing his error."

https://elderscrolls.fandom.com/wiki/Pocket_Guide_to_the_Empire,_First_Edition:_Elsweyr_Confederacy

Pelenial did it because his racist ass thought the Khajit were a species of elf, but he found out afterwards that was not the case.

While some Bosmer were turned into Khajit, that doesn't mean they're still elves. They didn't evolve from elves like the Falmer, but were instead morphed/mutated/magically altered to be something else entirely. Other than that there's zero evidence to indicate that Khajit are elves as far as I know. They've always been listed as a beast race.

I don't recall Orcs ever being listed as a beast race (I could be wrong about that).