These companies should be called out.
I usually provide a short sample piece between 200-300 words. If you have already provided a short sample of your writing style, the company or individual, in my opinion, should no require you to send another sample longer than that. I am always leery of those who asks for multiple samples of my writing equalling in 500+ words. In conclusion, I only send one free sample piece and require that anything further must be paid for.
That sounds like a good way to go about things, Lupa06. I've worked as an editor and even for a short time as a publisher's assistant, and it is not hard to tell the kind of writer someone is from a 200 or 300 word sample... either they're going to be lousy or show promise.
If promise, then they should get a short assignment... not a constant "show us more, show us more" because like you said, that starts smelling fishy real fast.
Now what I *might* have done back then, if there was a particular assignment in a totally other style of writing, was to ask for another 300 words in that style, BUT with a small honorarium in good faith... never a second freebie.