I hate to support Microsoft on this one - I was actually checking the rules to see if they forbid you from dual-licensing it - but you pulled this out of context. The license only allows them to use your code to evaluate who won the contest, and use it in promotional materials. Now, the latter part is a bit murky, it seems they have a license to publish a screenshot of your solution. But nevertheless, they are not claiming ownership of your work.

The full text is below:

Other than what is set forth below, we are not claiming any ownership rights to your entry. However, by submitting your entry, you are granting us an irrevocable, royalty-free, worldwide right and license to: (i) use, review, assess, test and otherwise analyze your entry and all its content in connection with this Contest; and (ii) feature your entry and all content in connection with the marketing, sale, or promotion of this Contest (including but not limited to internal and external sales meetings, conference presentations, tradeshows, and screen shots of the Contest entry in press releases) in all media (now known or later developed)

http://web-ngram.research.microsoft.com/spellerchallenge/Doc...