Xephyr fails to run on a Linux x86_64 system because hostx.c is built with _XSERVER64 defined.  It dies with this error:

X Error of failed request:  BadDrawable (invalid Pixmap or Window parameter)
  Major opcode of failed request:  55 (X_CreateGC)
  Resource id in failed request:  0x0
  Serial number of failed request:  7
  Current serial number in output stream:  12

This happens because RootWindow(HostX.dpy, HostX.screen) is returning None.

This broke with this commit:

commit 6a435b00003fb00930299a0e0810c93afc23a72e
Author: Dodji Seketeli <dodji@openedhand.com>
Date:   Wed Sep 19 15:35:51 2007 +0200

    Xephyr: check presence of extensions in host X
    
        * hw/kdrive/ephyr/hostx.c,h:
          (hostx_has_xshape),
          (hostx_has_glx),
          (hostx_has_dri): added these new entry points
        * hw/kdrive/ephyr/ephyrdriext.c:
          (ephyrDRIExtensionInit):
          check presence of DRI and XShape extensions before
          trying to use them.
        * hw/kdrive/ephyr/ephyrglxext.c:
          (ephyrHijackGLXExtension):
          check presence of glx extension before we use it.

which causes that file to include kdrive-config.h, which in turn includes dix-config.h, which defines _XSERVER64.