If such a question was given before an interview(to be answered at an interview) I would say it's ok.. but to just solve such a difficult problem as that on the spot is definitely not going to be done well by any programmer, and if the programmer does do it well that just means they can act on the spot(which isn't always the best thing for programming as designing things needs to take time and check every possible flaw) or that they have seen a similar problem before.
Edit:
Or possibly discussion about the problem would be good, like say laying down a plan of action whether or not you completely solve it.. and discussing how feasible and if there is a fast(but difficult) way to do it and such. I would not say that the interviewee should have to write down over 50 lines of C code in an interview to solve it though
