Xephyr keyboard layout

I have also spent some time trying to figure out those options. I have succeeded configuring it properly with the help of the setxkbmap tool and some guessing:

$ setxkbmap -query  
rules:      evdev  
model:      pc105  
layout:     de  
options:    grp:alts_toggle  
$ Xephyr -keybd ephyr,,,xkbmodel=pc105,xkblayout=de,xkbrules=evdev,xkboption=grp:alts_toogle -ac -reset -screen 1672x1022 -retro :50 &

The man setxkbmap page also provides a hint about where to find more configurations:

/usr/share/X11/xkb

Take a look into this directory, specially into this file, if using xorg:

/usr/share/X11/xkb/rules/xorg.lst