I read pretty much all of his books when I was younger, and It made an impression with me as well. I started reading everything about him from the points-of-view of those around him such as his student Amy Wallace, his former wife Margaret Castaneda, and some of his tensegrity students who gathered material at _sustainedaction.org. The impression I have after looking at it all is that he took trips to Mexico, he talked to at least one person out there, but that his books were an amalgamation of his exposure to several influences. If I remember correctly, they even make a case at the formerly mentioned website that he was exposed to the ideas of Gurdjieff quite early on in his seeking which could be the source of him portraying Don Juan as using shocks to the personality as a teaching tool.
It seems pretty likely that he become increasingly abusive and domineering as a teacher, especially during the "Cleargreen" epoque (see above website for explanation). Even his tensegrity movements were quite possibly ripped off from a chi kung teacher he studied with for around 10 years. His trying to find elements to build a path is not fundamentally flawed I don't think, but I personally find not giving reference to the sources a a troubling sign.
In any case, the above are my speculations from my researches which were not limited to just the things I mentioned above though they form the bulk of it. It is not likely we will ever know the whole story.
It should be noticed, that of his voluminous works, we at this site quote only 2 things frequently: (1) his description of the predator's mind (2) his discussion of petty tyrants and the qualities necessary to deal with them. These 2 passages so richly describe their content that they stand alone. As his discussion of the predator's mind came late in his works, I wonder if he was having some moments of clarity; understanding that he had lost his way due to an insidious and nearly undefeatable force in his own mind.
For me personally, his writing sometimes described in a majestic and breathtaking way a sort of longing to be in touch with one's own soul, but I personally find the sources that this forum calls upon in various areas from diet to psychology to esotericism to be far more relevant and applicable than anything Castaneda ever wrote.