Asking someone to code without an IDE during an interview is a waste of everyone’s time in my opinion.
Has there ever been a time in your organisation’s history when you needed a QA engineer (or any other engineer) to write code in Notepad to fix an issue or to rollout a feature?

Inasmuch as we’re trying to ascertain people’s coding competence, we need to also maintain an air of realism with these interviews. Granted, there are GenAI coding assistant plugins for most IDEs these days and you’re trying to guard against that. But even then, it takes someone that knows what they’re doing to know when the generated code is correct and understand the reason any generated code works the way it does.
To me, this reeks of laziness on the part of the hiring organisation and I say, we can definitely do better.