The input method doesn’t work inside Xephyr? Sometime you find out that
Preparation of font set "fixed" for XIM failed.
The font path could be wrong. Make sure that the path to
misc is the first one in row.
xset +fp /usr/share/fonts/misc
would fix it for the moment (path might vary).
Compiling Xephyr I missed the following switches:
./configure --enable-xephyr --enable-kdrive-evdev --enable-kdrive-mouse --enable-kdrive-kbd --enable-kdrive --prefix=/usr
Thanks for paying attention!