I think someone decided to forkbomb it. I'm still logged on and every external command I type gets me "bash: fork: retry: Resource temporarily unavailable".
I was in there 5 minutes ago, did cat /levels/level02.c and then it stopped responding. I don't think cat could crash the server, but if it did, I'm sorry?
For anyone building something similar, I imagine having an elastic load balancer for TCP port 22 with a health check on a web service that spawns a process as each of the user accounts before returning "good", combined with an auto-scaling group to make certain there are always a couple healthy instances, would be an automated way to keep something like this running through fork bombs.
They are asking for code or a brief description of how you proceeded through the steps. If you're going to take the time to document the process (correctly) then it shouldn't matter that you have the root password. Presumably you'd get stuck at some point where you couldn't explain how you achieved the subsequent step.
This is why we can't have nice things.