why was the empire strikes back named episode v?

She's close - there are two stories as to why this is the case:

Lucas wrote a long story that started with Darth Vader, but it was such an involved story that he decided he'd only do half of it, so he started with the second half and told the story of Luke Skywalker, hence STAR WARS starts with EPISODE IV: A NEW HOPE in the scroll.

Also, the Star Wars series and the Indiana Jones series are both homages to 1940s and 50s serials - where you'd go to the movies every weekend and they'd show a fifteen minute film that picked up where the last clip ended and then would leave you witha cliffhanger so you'd come back the next week. If you missed the first few, you'd eventually see one that started with EPISODE 7, or 8 , etc. Lucas wanted his movies to seem like a serial, so he decided to start "in the middle," since he knew there was more story at the beginning, but he hadn't written it yet.

Incidentally, EMPIRE STRIKES BACK was always called EPISODE V, but it was the second Star Wars film to be released. JEDI was always called EPISODE VI.

The reason why was because the first three movies came out after they had made all the other ones, they wanted to explain how everything happened so they made the first three, and the other movies became 4, 5, 6, ect.