Well, I am doing algorithm development but that's not really the point, and an intern or entry level developer isn't going to be focused on that. The point is that you need to understand your tools to use them effectively. A basic stack is an extremely simple and fundamental data structure that virtually any developer might need. If you don't understand it well enough to code a simple example (I spell out that they can ignore things like error checking) in 45 minutes, I find it very hard to believe that you understand what a stack is and when you might want to use one.
Fair enough. I had algorithm related questions for an ETL developer position.
Really annoys the crap out of me, when I spend 1 hour doing shit that it wholly irrelevant to the job at hand.
On the other hand I had an interview with 4 hours worth of different algorithms questions - for a job where algorithms mattered. And that interview was pretty fun. Even though I didn't get the job.