So, for the secondary prompt "Please describe a challenge you faced and how you addressed it", in what direction are you guys attacking this question? What do you think they are exactly looking for?
Adcoms are interested to how you will respond when the going gets tough - which is something everyone experiences but is particularly salient in a field such as medicine that is not only intellectually demanding, but emotionally taxing, financially burdensome, etc.
One approach: is there an event in your life that made you question whether or not you would be able to make it through with your mental and emotional health intact? For some people, this could be the death of a friend or loved one, experiencing an illness or injury, or a period of deep intrapersonal struggle.
Another approach: have you ever been in a circumstance in which you weren't completely confident that you could accomplish what was expected of you? This could be an extremely demanding academic load, a high-pressure employment scenario, or learning a new and difficult skill.
Ideally, you would combine the above two factors into a single answer. This is because, when you are a medical student/resident, both of these types of scenarios will happen to you in combination. Personal losses are a fact of life - we are all going to lose loved ones at some point. For many people, this will be while they are in their medical training. Also, every person that undergoes medical training at some point feels like they do not have what it takes to make the cut. This is part and parcel of learning the enormous amount of information and skills required to care for sick people.
So, med schools want to know how you responded when you have been faced with these types of challenges in the past, because similar challenges will undoubtedly occur, and past behavior is the best predictor of future behavior.