How the questions in challenges are selected? Whats the algorithm? And how its updated?

Answer 1

AFAIK, they’re randomly selected.
However, the XP is calculated using the Elo rating system: https://www.sololearn.com/faq#q17

Answer 2

That's already understand that there is no algorithm because bcz questions may repeat in next quiz just after it. (I had seen it)
It may possible that for a single quiz choose random 5 out of these 200 or whatever they have.