Quite frankly, I don’t think you know anywhere near enough to be commenting on the power of the Night Elves in lore. They are easily among the strongest races in the World of Warcraft and are a fundamental member of the Alliance.
The rebel Kaldorei, together with their Wild God allies, pretty much single-handedly fought off the innumerable forces of the Legion that threatened Azeroth in the War of the Ancients, a threat that has arguably only been matched by the most recent Legion invasion which left Azeroth on the verge of death. Since the Sundering, they’ve kept relatively unending peace across Kalimdor. This, of course, was disrupted twice by C’Thun in the War of the Shifting Sands and the vast armies of satyrs in the War of the Satyr respectively but even then, the Kaldorei were overwhelming successful in both instances.
Blizzard’s depiction of the Night Elves in the game is admittedly quite poor by and large but even that isn’t entirely true as there are at least a few Kaldorei characters that have remained relevant up until now since even as far back as Warcraft 3, such as Tyrande, Malfurion, and Illidan. To see some instances of them being weak in game and then extrapolate that to mean that they’re just entirely weak in the lore is at best incredibly ignorant and at worst blatantly dishonest.
Also, Xavius isn’t a b tier villain. He is arguably primarily responsible for the Legion’s first invasion of Azeroth, having been the first to make contact with Sargeras, and is also directly responsible for Nzoth’s corruption of the Emerald Dream.
Just a quick note, no. Do not take what is depicted in game over the outside lore. Almost all of the novels and books, most notably the Chronicles, are canon. The entire point of the outside lore is to clarify the stuff in game because a lot of it doesn’t make sense due to WoW being an MMO. There is also a difference between the books and the RPG. All of the things in the RPG are not canon. The books, like the Illidan novel and Wolfheart, are canon.
Another note, the entire point of Val’sharah was to depict their weakness. That was literally the entire point of the zone. It was meant to build up to the first raid tier which had us travel into the Emerald Nightmare to defeat Xavius and avenge Ysera, while also getting payback for the corrupting of Shaladrassil and of Cenarius which happened earlier in the questline.