Just a few seconds searching with Google netted me this gem: The Word Search Construction Kit. With it you can generate your own word searches with hidden offensive words!
Having played with it for just 5 minutes and generated one puzzle, I have already found the word yid buried in it. I’m sure if I stared at it long enough I could find others.
This particular software does not seem to have any censorship function other than a spell checker for the target words. In fact, I would not be surprised if this is the exact same software used to generate the offending puzzle.
From the article cited by the OP:
If it is in fact the same software, it seems quite possible that this is simply a case of beginners using very simple software without the safeguards that astorian described.
I’m going to mess around with it for a while and see how frequently such unintended words do in fact appear.
In fact, you can do it yourselves, here’s the first puzzle I made along with a list of the words I used to generate it.
T W H Y W P N N W N P L Y R L B S H J S America
W O P B O Z R O O O E G A J E Y E P S F Independence
D L U C L D G M I I U Q I A X L T A U O July
H E W A S H I N G T O N I R H K A Q V A Washington
N I F M T L H J F A U I H H D K I B V T celebration
J Q Y H D P U U A R C L O R H E C S A B constitution
A P I C E L E B R A T I O N Y T O W O K declaration
A N A L Y N Y C Y L N U R V B E N T A X fireworks
M A X O X R N C N C Z R Q E E N S G T O fourth
K N L Q L J T L E E X A N P M R T N U M revolution
L G U L C U V Z A D D V P Z P A I Q W A
W J W J R K R I I T K N F O M G T N K N
R E N E I M M K U K Z W E E P L U S U S
X H I J O Y X U A I E L X P G V T Y G Z
F Z F N E Y F T N S K R O W E R I F Z M
I Y I U F C Q T Z V W P A P B D O E T C
T T G W F V R A I M U N N Q M U N S A A
M V F P A R W L C K P U P Y R V K I A A
A O G P B I A U W X S E Y T H L T C O D
D U D O H S N V L O S L H X D O N K H Y
As I said, a cursory examination has already truned up the word YID (starting in row 14 third letter from the end of the row, running diagonally down to the left).
I choose the seed words by using those listed in the original article and adding related words randomly.
And yes, I do have too much time on my hands.
gEEk (crossing my fingers that the puzzle looks right, it did in preview…)