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Longman dictionary defines liquid (NOUN or adj) as:

[uncountable and countable] a substance that is not a solid or a gas, for example water or milk:
Add a little more liquid to the sauce.

Fluid (NOUN or adj):

[uncountable and countable] technical
a liquid :
He is not allowed solid food yet, only fluids.
a powerful cleaning fluid.

So the question is how would you explain the difference? Is it merely an issue of technical term versus normal usage term? I need more lucid explanation for the two words. A student asked me the difference between them but I could not really discern the difference.
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I agree that "fluid" is a more technical term, but they mean the same as nouns.

I would use "liquid" as an adjective for a substance - for example, when you get medicine for your children, you can request it in either solid form or liquid form, not fluid form.

But if you describe how someone moves, and her she moves very smoothly, you would said she moved fluidly, only liquidly.

I also think - Incho, help here - that in physics, a gas is also considered a fluid? (Physics was more than 20 years ago for me, so I may not be remembering that correctly.)
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fluids=liquids + gases + (plasmas)
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A fluid is defined as a substance that continually deforms (flows) under an applied shear stress regardless of the magnitude of the applied stress. It is a subset of the phases of matter and includes liquids , gases , plasmas and, to some extent, plastic solids .

Fluids are also divided into liquids and gases.

http://en.wikipedia.org/wiki/Fluid
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Good to know my memory isn't completely shot. In physics, fluids do comprise both liquids and gases.

But outside the classroom, 99% of the people will think of a fluid as a liquid.
Students: Are you brave enough to let our tutors analyse your pronunciation?
Thanks! That is very helpful!

Then I realize, the term "coal liquification" was only an analogy, meaning 'coal fluidification'.