Your question, "How did Prakasananda Sarasvati see or think that Lord Caitanya was the Lord Narayana Himself when he only realized Brahman?"—by personal audience of Lord Caitanya they could realize Him as Narayana because they were sincere in searching out the Absolute Truth. As it is confirmed in the Bhagavad-gita, that an impersonalist, if he is sincere in searching out the Absolute Truth, then ultimately such impersonalist can reach to the point of the Personality of Godhead. So Prakasananda Sarasvati was submissive to Lord Caitanya, because he begged Lord Caitanya to occupy superior seat, while Caitanya Mahaprabhu out of His extreme humbleness, was sitting in a place where they were washing their feet. A Vaisnava is always humble, and if a person does not misuse this humbleness of a Vaisnava, he gets a chance to be elevated. But if somebody misunderstands the humbleness of a Vaisnava then he is doomed. Just like in the Caitanya Caritamrta, the author Kaviraja Goswami says that he is lower than the stool, and Sanatana Goswami says that he is born and associated with most degraded persons. If such humbleness of Vaisnavas are taken verbatim, then we are misled. Prakasananda Sarasvati appreciated the greatness of Lord Caitanya, even though He was humble, and therefore Lord Caitanya's Mercy was bestowed upon him, and thus he could accept Him as He is.
The Mayavadi philosophers even they do not follow Sankaracarya because their philosophy itself is offensive. Sankaracarya has accepted Krishna as the Supreme Personality of Godhead, but the Mayavadis take Krishna as a great personality only. That is their misfortune. On account of successive offensive attacks on the Supreme Person. So therefore the subsequent result of Mayavadi philosophy, on account of their rigidity to this misleading philosophy, they cannot make progress. Besides that, as it is confirmed in the Bhagavad-gita, the Personal Feature of Krishna is very difficult to be understood by the nondevotee class of men. So the Mayavadi philosophers are, as a class, non-devotees. Naturally they are misled almost in all occasions. But some of them were extraordinary to come out and accept Krishna's personality. This is explained by Arjuna also in the Bhagavad-gita.