Myth is a story of the past that is not necessarily true.  Fiction is a story that is not true but may contain truths.  A lie is a false statement.  Myths of Greek, Roman, Norse, Egyptian, Sumerian, and Babylonian gods have all been dismissed as myth, fiction and untruth.  People have no problem saying that at some point, people with overactive imaginations started believing in things that were not true, and passed this off as true despite the lack of truth in their beliefs.  The Norse mythology can be myth, fiction, and lies.  It tells a story that is not true, it was invented by someone at some point despite being untrue, and it is passed off as true when it is not.  Valhalla, Olympus, the Egyptian afterlife- all fictional myth, all untrue.  

Myths in the Bible persist because they are tied to history.  The history that did happen is fact, and the history that did not is myth.  Of course the Bible makes no distinction: this is the real history, and this is the Biblical history which is also true.  True history has evidence to back it up, while Biblical history has had a number of attempts at evidence, or speculative evidence, to explain Biblical history in purely scientific terms:  The Ark of the Covenant was an electrical capacitor that shocked people, the plagues were caused by a volcanic eruption that resulted in blocking out the sun and releasing underwater gas to kill the Egyptian firstborn, etc.  The problem with this is that every event "needs" to be proven.  If some or most of the events are fiction, ie made up, then this solves nothing.

 On the other hand you can say "this is clearly fiction, this is clearly a story, this is clearly made up."  But believers cannot accept this- it becomes an insult to say this is fiction, because if it's spoken as truth and is really not, then it's a lie.  No one wants to hear that they believe in lies.  The LDS community believes in the stories of Joseph Smith, that a group of ancient Hebrews sailed to America and had great battles in New York, and that truly he recieved this story from an angel along with proof that was miraculously taken away.  Now the outsider can say "he's obviously making this up," but how can a believer accept that?  Saying "this is all fiction" or "this is all a lie" seems like an insult rather than a statement.  Some believers see this as people being too closed minded for not accepting things that are miraculous, or passing things off due to ignorance. 

For example, Passover is the celebration of the spirit passing over the doors of the Hebrews to spare their lives from the last plague.  Jews believe this to be true, which is why they celebrate it.  To say "no, this never happened, this is a made up story" is something that believers could not accept, because they believe in it in the first place (or: why believe in it if it's false?  Therefore it must be true).  Much of the New Testament is dedicated to explaining unbelievers as doubters, or the ignorant, or those who are too closed minded to see the "truth," thus any attempt to say that Christianity is false and should be ignored is met with "oh yeah, just wait until I die, I'll prove you wrong."   

  In summary, people don't like to call fiction fiction, or use the word "lie", even if saying "your religion is false and filled with lies and made up stories" is the most honest statement about that religion (however polite it can be phrased).  How can such a statement be given to others effectively?