I need an emulator for Windows CE 5.0 to test an embedded device (not PDA or smartphone) application that I am developing. This is what I have already tried:
Yes, the option you've missed is that you can create your own CE image for the emulator with the emulator BSP. You then generate an image and run it with Device Emulator 3.0.
The reason Microsoft no longer ships a CE emulator image is that there is no such thing as a "standard" Windows CE OS image. Generally speaking you create an image that matches whatever you've got on your specific target hardware.