Why does my water heater make smelly water?

Build up of minerals or bacteria in the tank.

Check the anode rod.

That’s what made my friends water smell like butt.

Does it smell like sulfur? Smell metallic? Musty? Like sewage?

They all mean different things.

Like sewage.

Time for a new one… Some things cooking in there and it’s not just water!

Get a new water heater immediately, your family is in danger from the contamination that is in your current unit.

According to my brand new water heater, “smelly water” (their term) can be cured by turning the temperature up to 140° or above.
Of course, that temperature will probably burn the crap out of you if you’re not careful. Maybe try it and see if it sterilizes the water, then turn it back down.