I have had similar lack of success when trying to emulate a Mifare classic 1K, and I have direct access to the PN532 chip in my design. I have tried some examples that come with libnfc, as well as many "examples" from the PN532 documents (UM and Application Notes), and all these tests basically end the same way: MiFare Authentication Errors (status - 0x14), or Timeout Error (status = 0x01) or Target Released (status = 0x26).
I get past the anti-collision without any issues using the InListPassiveTarget and InSelect, but for some reason when the 4 byte random number (nonce) is sent in response to a Mifare authentication command (0x60 0x40 for example) the reader (initiator) does not respond with the pro forma 8 bytes (4 should be the response to the challenge and 4 should be an initiator issued challenge)
See a similar post I have that goes into a bit more detail of my setup: http://www.libnfc.org/community/post/3524/#p3524
In the meantime I am taking Romuald's suggestion (from this and other posts) to try to use ISO 14443-4 PICC Emulation, which is explained in more detail in the PN532 documents
However, if anyone from this forum would like to team up to figure this out I would be interested in that collaboration. The Datasheet for the PN532 clearly states that Mifare Classic 1K emulation is supported, so there should be a way to figure this out.