Can you Unyielding Spirit a challenge, or is it not spell nor ability damage?

Unyielding Spirit cannot prevent damage from a Challenge.

According to multiple RiftJudge FAQs (e.g., FAQ 8394, 4635, 2890), Unyielding Spirit only prevents damage dealt by spells or abilities. Challenge does not deal damage itself; rather, it causes the participating units to deal damage to each other. Because the units themselves are the source of the damage, rather than the spell or ability, this damage bypasses the protection provided by Unyielding Spirit.