alt Hacker NewsYea, there's really no way to do an "interview assignment" well.
If you give unlimited amount of time, you're giving an advantage to people with no life who can just focus on your assignment and polish it as if it were a full time job.
If you give a limited amount of time, then you're making the interview a pressure cooker with a countdown clock, giving a disadvantage to people who are just not great at working under minute-to-minute time pressure.
Depends on the purpose. If you treat it as a minimum bar to pass and are up front about and actually adhere to that then anyone spending more than the limit on it is presumably just wasting his own time (and to an extent the company's because the application process continues). It only becomes a problem if instead of an objective pass/fail metric you start gauging other details that would benefit from additional time spent.