If she doesn’t get hired, she should bill him for the hours worked, at a freelance rate of her choosing.
Freelance writers typically send clips, published articles of their choosing. That is a good sample and does not require work for free. You can’t do that for proprietary stuff, though.
I don’t like how this feels. I was asked to do a working interview once, and I did. I worked for 8 hours. But I was paid for my time. I didn’t end up working there full time because their other location closed unexpected and they couldn’t hire anyone after all, but I did do some other work for them over the course of the year.
Was this something that’s supposed to take 6-7 hours to do?
I’m a graphic designer/art director, and we’ve had potential entry-level hires (or interns) design a sample ad for us before, in situations where we were choosing from a group of less experienced designers without great portfolios. We give them some images, logos, and copy, and have them design an ad to our specs. It gives us a good apples-to-apples comparison of what kind of work the designers can do on the type of jobs they will be working on in the position.
With more experienced designers, their portfolios generally speak for themselves, and this kind of thing isn’t needed.
This isn’t “free work” in the sense that we benefit from it in any way other than for hiring purposes…we’re not sending those ads to print or anything…they’re merely there for a test, and only because design is a field where a resume alone won’t cut it.
Demonstrating expertise is fine.* Requiring the candidate to do the equivalent of a day or more’s work is over the line as far as I’m concerned. They may be well aware that jobs in the OP’s spouse’s field are hard to come by and are deliberately taking advantage of interview candidates in the knowledge that they’ll likely get away with it.
If they’re otherwise offering an attractive position it might be best to bite the bullet and put up with it for now.
*our M.D. group has administered interviewees a test requiring diagnoses of cases previously made by members of the group. That takes about an hour and has no financial benefit for the group. I recall an interview years ago in which I was asked for a consult opinion on a case, which took me less than 5 minutes and helped generate a job offer. It would have been trickier if they’d asked me to do a current day’s work, seeing as I wasn’t licensed in that state yet and in any case would have told them to fark off.
OP, what was the end result here? 
That guy ended up making an insultingly low salary offer, which she declined.
She’s working a few hours a day on a probationary-type basis as an independent contractor at another place very close to her current full-time job. They’re a relatively new operation, but they are growing pretty quickly. She gets along really well with the owner, who seems to be very smart and a good businesswoman. She really likes this place, and they are willing to pay her an acceptable salary, and if things go well after a month or so, they will bring her on as a full-time employee and she can quit her current FT job that she hates.
Good, I hope the new place works out.
Back to the original question, I’d never heard of “take home” work, but I’ve known cases of having to do a hands-on test. For me, seeing how the evaluators respond to what we are doing during those is a big part of my side of the interview: are unexpected correct responses considered good, surprising, bad, how-dare-you? How do they respond to requests for clarification? Specially whomever is going to be my manager: I’ve worked for people who wanted subordinates to read their minds and to do exactly what the manager thinks he would have, and I’d much rather not do it again (nowadays they tend to be my clients and pull that shit on other people - I still hate it).