alt Hacker NewsCounterpoint to many responses here - when I have interviewed people, it’s a really positive signal if the candidate says they have already seen a problem- the we can move onto something more interesting! Not solving does not mean failure either. As a candidate myself I always mention if I have seen similar problems, such as finding primes - real example, and I was hired on that loop at Microsoft!
On the other hand, if I heard that a candidate had not mentioned they had the same question twice, or later let it be known they already knew the answer, I would lose a lot of trust in them.
Be honest; it’s more likely you will be hired by honest people.
I'd preface the solution and the key point before mentioning that I'd seen this problem before and then further ask if they still want me to code up the solution. This eliminates the case that I, the interviewee might be bluffing. Also they might just be interested to know if you can think on your feet by then adding a twist later. who knows not my call.
It would be dumb if the next one they throw at me is one i've also seen or is ridiculously hard for an interview. Then i'd question the value of my honesty.