Xephyr: command not found

Maybe Your $PATH variable doesn't contain the default paths? echo $PATH should give something like:

[root@server ~]# echo $PATH
/usr/local/sbin:/usr/local/bin:/sbin:/bin:/usr/sbin:/usr/bin:/root/bin

If it's empty, You may set the PATH variable with this command

export PATH="/usr/local/sbin:/usr/local/bin:/sbin:/bin:/usr/sbin:/usr/bin:/root/bin"

On CentOS possible default full paths are:

/usr/bin/Xephyr - from package: xorg-x11-server-Xephyr

You may install the required package with command yum install {package}

On Debian possible default full paths are:

/usr/bin/Xephyr - from package: xserver-xephyr

You may install the required package with command apt-get install {package}

Error in other languages:
Xephyr: bevel nie gevind nie
Xephyr: comandă negăsită
Xephyr: comando não encontrado
Xephyr: commande introuvable
Xephyr: command not found
Xephyr: käsku ei ole
Xephyr: không tìm thấy lệnh
Xephyr: komanda nerasta
Xephyr: Kommando nicht gefunden.
Xephyr: kommandot finns inte
Xephyr: komut yok
Xephyr: nie znaleziono polecenia
Xephyr: níor aimsíodh an t-ordú
Xephyr: no se encontró la orden
Xephyr: no s'ha trobat l'ordre
Xephyr: opdracht niet gevonden
Xephyr: parancs nem található
Xephyr: perintah tidak ditemukan
Xephyr: príkaz nenájdený
Xephyr: příkaz nenalezen
Xephyr: команда не найдена
Xephyr: командата не е открита
Xephyr: 命令找不到
Xephyr: コマンドが見つかりません