I have found many interesting things about the test, and the problems are not with the test itself only, but also inside Xembed implementation.
First, the test always reports it is passed even if some test cases inside are failed (with the exception of timeouts, crashes, etc.) So the test should be modified to handle test cases failures correctly.
Second, all the test cases are always failed on my desktop. Most often the failing check is the very first one: 'waitWindowActivated'. This message should be sent by XEmbedCanvasPeer when it finds a client reparented into it. However, the corresponding XReparentNotify never gets dispatched to the XEmbedCanvasPeer because of quite another bug: 6501838.
I have a temporary fix for 6501838 and with this fix all other XEmbed server test cases seem to pass. So I'm waiting for the fix for 6501838 to be integrated and then putback the fix for java/awt/xembed/server/RunTestXEmbed.java test.