Here's what my experience has been.
1. Guard Cabin: The place is hot, cramped and down right hostile to a dog. I travelled with my Labrador some four years ago (Pathankot to Pune), and my husband had to argue with the guard every time he wanted to go and attend to the dog, since he just won't allow him into the cabin. Eventually he had to bribe him to keep coming there. And once the guard changed, the same story repeated. Also heat from the engine made the entire cabin very very hot even for a human, so you can imagine what was poor girl's condition by the time she reached Pune.
So now when we move, we either travel by car (1000 kms or less) or we send them with a person in the same truck as the luggage.
2. AC first class. For temp travels we did try to travel by first class. Here's what I have found:
A) When you book the first class, you will not be told your seat number until last minute since they never know a VVIP wants to travel and demands a particular cabin.
B) There are only one cabin with two berths, the rest have four berths.
C) So if you book two berths, there's no guarantee that you'll get the private cabin.
D) To take the dog in first class cabin, you have to submit an application in writing to the Station master on the day of your travel requesting the two berths' cabin, so that he may keep you in mind while eventually getting the chart up. However, there's no guarantee that you'll get that cabin.
E) You may take the dog in a cabin ONLY if your co-passenger is okay with a dog travelling in the same cabin. If in the course of the journey, some other co passenger objects, your dog will have to be transferred to the guard cabin.
F) If you want official details. Here's the URL
Rules -> Luggage
In the resultant frame look for "RULE AND RATES FOR CONVEYANCE OF DOGS :"
3. when you say railway authorities, who exactly do you mean? Did you talk to the station master? Do not believe anyone else. You wouldn't believe what all stories I had to listen to before finally stumbling on the ground reality.
4. Although sleeping pills are not advisable, sometimes they are the only way. They'll not make your dog dose off, they'll just make him lethargic, and groggy, so he won't be very anxious while travelling. Ask your vet for the medicines, I used Gardenal or Calmpose - two tablets for 8 hrs(Human medicines, as prescribed by her vet). But just be sure not to self medicate him.
All the best.