You've stated it perfectly. Either you're totally misjudging the amount of work involved (in which case, you're probably not what they're looking for), or they

You've stated it perfectly. Either you're totally misjudging the amount of work involved (in which case, you're probably not what they're looking for), or they are asking far too much for a coding interview. The longest off-site coding test I've ever been involved with took 1.5 hours, split into two parts of 45 minutes. If they can't gauge your chops in an hour and a half of technical questions and real-time problem solving, they're not doing it right.