http://bugs.winehq.org/show_bug.cgi?id=57584
--- Comment #11 from Alex Henrie alexhenrie24@gmail.com --- It turns out that reverting the fix for Bug 48088 restores the correct colors in Xephyr. The original fix didn't make much sense to me in the first place (why would the window palette be hard-coded?) and it seems that with your HBITMAP change in commit 6ace92e0caf, it is now unnecessary.
Patch sent: https://gitlab.winehq.org/wine/wine/-/merge_requests/9619