Khu is generally associated as the combination of the Ka (Spirit) and Ba (Soul). The Ba being what makes a person unique similar to personality and teh Ka being the "life force" (for a lack of better words). The Ka is what distinguishes those alive from those dead. The understanding that the individual is not an individual at all but rather a “boundary” (for lack of better words) of totality is what is often referred to as the Khu, soul or spirit.
Aleister Crowley wrote in "The Law is for All": This 'star' or 'Inmost Light' is the original, individual, eternal essence. The Khu is the magical garment which it weaves for itself, a 'form' for its Being Beyond Form, by use of which it can gain experience through self-consciousness, as explained in the note to verses 2 and 3. This Khu is the first veil, far subtler than mind or body, and truer; for its symbolic shape depends on the nature of its Star.
Liber Al Vel Legis (1:8) "The Khabs is in the Khu, not the Khu in the Khabs." Perhaps this is suggesting that the body is of the soul, not that the soul is of the body. Although the body is generally seen as the vehicle of the soul, this statement would be suggesting that the soul is the vehicle of the body.
Liber Al Vel Legis (1:9)"Worship then the Khabs, and behold my light shed over you!"