They obviously wanted it as a state (not that this was anywhere near a realistic prospect). Even beforehand, there had been attempts (by a small pro-slavery minority) to split off Southern California and turn it into a separate slave state. The idea of the slave states going all the way from coast to coast was just inherently tempting to them, and the notion of going independent made it even more tempting ("a Pacific coastline is better for our country").
Regarding negotiations, one must understand that the leading Southern stance was "We will soundly defeat the damn Yankees, and then all the slave states will flock to our cause, and we'll be the ones dictating terms!" -- And the occasional cool-headed Southern politician, who knew this was never going to happen, was too sane to waste any thoughts on the pipe dream of Confederate California.