Not so sure I agree with the 'sorry way to weed people out' statement. I have experienced this myself during simulator evaluations and it is just a tool to find out what spare capacity (if any) you have and to see how you prioritise tasks when hand flying.
The thing is, if you you were asked a question for real in the aircraft whilst you were working close to capacity, would you try and answer? I personally wouldn't and would say 'STANDBY'. This is exactly what you should do in the sim. Prioritise. I told the guy to standby three times as he asked the same question over about a minute. I never did answer it, but I also never lost any altitude, stayed on the heading which kept my single needle track good and sounded confident and 'in control' all the way through.
I don't know, but I suspect someone who answered the question correctly, but let their flying go to pot would not have had the same result.
So I don't think it is unfair, it's just another 'tool' for the instructor/ examiner to use to judge your skills, just like putting a little bit of crosswind in the sim, or failing an engine for a current type rated pilot etc.
My advice is to be confident in your abilities (but not over confident), learn the profile inside out and backwards so you don't really even need to refer to the SID/STAR/Approach plates, memorise some pitch/power settings for various phases of flight and get some practice in (the lower your hours and the less recent you are, the more the need to get a couple of hours in the sim before any test). The biggest tip of all is to ensure your CRM is good. Many, many instructors are looking just as deeply into you CRM performance in the sim as they are at your stick and rudder skills.
Good luck.
PP
ps Another variation on the theme is to have a 'two crew' sim assessment, where both candidates are in the sim together acting as a crew and the roles swap half way through. The PNF is given a question paper to answer whilst the other guy does the flying. The PNF will only answer questions at a suitable time; if the other guy is not doing that well then there may be no suitable time for the question paper. The guys who start the question paper at gear up and have it finished within 10 minutes may well have failed as they were not monitoring the other guy properly as the PNF should be doing. Priorities.......