I had a coding test once where I was given someone else's code with an introduced bug, and I had to fix the bug. To do so, you were basically documenting the code along the way as you traced your way through possible trouble spots. It felt far more meaningful than the typical "implement some list traversal algorithm that you won't actually ever use at this job."

I've had a similar interview and although I did not solve the bug, I think the interview was much more effective than most algorithm based interviews. Not only did my interviewers get to see how I navigate a codebase and use my IDE/other tools, they also saw how I approached known unknowns and discovered information.