You should have given more detail on why this problem is deceptively hard. I am guessing that the simple solution of looking up the word in the dictionary seems to work ok (especially in the context of an artificial competition, which doesn't have to accept uncommon spellings, words in other languages etc), but still breaks down hard because of proper names, which are common in cross-words.
I think the point is that "Non-existent words should be easy to check for" is a useless metric, because plenty of answers are non-existent words. Proper names and things like that, many of which the computer may not have in its database.
So it can't simply blindly reject answers that are non-existent words.
An example of how this computer could make a mistake: Sometimes two proper names are crossing at a vowel. If you don't know either name, you sometimes have to guess blindly at the answer. (This exact scenario is rare in crosswords like the Times, but do occasionally come up, and similar scenarios exist.)
I would definitely be interested in knowing why it is hard. And yes, I was thinking about lookup: for example from (1) a dictionary, (2) a set of proper names and (3) a set of previous crossword answers. While nothing is perfect, but this (from an armchair) seems like it should work pretty well. And I am not proposing it as the main part of the algorithm, just a check on non-words.
It depends a lot on what you mean by a language. Iglf you define 'the English language' as 'all of the words that some amount of people who identify as speaking English would understand', then of course there is no dictionary that would cover that (but by this definition, many words in the English language are Indian, Chinese, Romanian, Russian, etc, and would be completely incomprehensible to the vast majority of people in the USA or England). On the other hand, many people define the concept of a 'correct English word' as 'any word with a definition in the OED or Merriam Webster (ignoring proper nouns)', and leave other words as being 'wrong/foreign language'.
Either way, this is all moot when discussing a crossword puzzle contest, which explicitly limits itself to words in a specific dictionary + proper nouns. The problem of proper nouns is still extreme, and brings down the whole idea, but at least the problem of recognizing 'all possible common nouns that could be present in the crossword contest' is simple.