Thanks for starting this discussion!
And let me start off by saying I too have been asked to produce a project during an interview process and it did help me get jobs in the past. I also work in a creative industry so it's not unusual to be asked about producing a writing sample and/ or, (in my line of work today --- UX) be given a UX case study to dissect and share how you'd approach a problem space.
Now, that I'm older and wiser, I'm a bit apprehensive about these sorts of exercises due to what you said "seen your work be incorporated by an org and they didn't pay nor give credit to you." Additionally, we're living in different times now and I believe more candidates are pushing back or rather, raising more questions about "why" this is necessary and making sure their paid for this since a job isn't guaranteed once you submit your work.
My stance today is...probably a hard no unless I'm being paid for it and it must include some sort of legal agreement (intellectual property) that protects my idea/work from being commercialized by a company. If I'm asked now to produce a project, then I point them to my portfolio and work references at this point.
I get recruiters/hiring teams use this to determine "candidate skill level" but I believe we're living in different times now where these sort of exercises can now be "jail-broken" with generative AI (or other cheat codes out there). Also, one exercise is hardly the real picture of someone's ability to perform.
So, if these sorts of exercises continue then universal rules/laws need to be written and enforced to support both the candidate and potential employer to do this in a more ethical way. Otherwise, I'd say, these exercises should stop.
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