I suspect there will be four categories:
1) Winners (one best one gets the tantalizing prize package, a few runners up get the 200 words and digital image.)
2) Builds who could win, but are on Pun Pun's Ladder (DQ'd)
3) Builds who could not succeed or not enough info was given
4) Joke entries
So I imagine you will be offering the challenge to everyone in group (1) and no one from the other groups.
This seems a little over the top, a PbP fight can take weeks. This rule will probably mean all the other contestants lose interest by the time their turn comes up after the first contestant.a) It will be an identical challenge at start (obviously, Balor may react differently) for all parties, please don't read other peoples until you have done your own.
If you're building a dungeon and letting them roam it looking for the Balor then they should be able to find ways to lure him to a particular room or set a trap. You've built in WLD style backstory that he is trapped there; a good strategy using that background is to bluff him that they have a way out.d) You will have to assault the Balor yourself, because he doesn't feel like coming to you.
If neither the backstory, nor the rooms of the dungeon, nor the size of the dungeon can come into play and no luring or tricking is possible - then you may as well ditch the dungeon and make it an arena combat.
Just my thoughts - I don't want to step on the toes of your contest or confuse entrants, but I think it bears consideration.
ap