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The requirements of a contest can vary. For example, if there's a certain user who wants blue and yellow, that would be a requirement. There is one requirement that you should do, or it would most likely get you banned, blocked or reported. Follow the community guidelines of Scratch.
The prizes can vary, as well. Maybe first place would get a follow, a shoutout, etc.
How to make an entry
You can make a modification to your entry as much as you want, until the contest ends
Making your own entry with a separate project
Making your own entry with a separate project is not against the community guidelines, but just to check, you should ask the owner of the contest. You should still give credit, too.
If you are making your own logo contest, you can make other requirements as long as they follow the community guidelines. If you are a user who is participating in the contest, you may not change the requirements, unless it's okay with the user.
Advertising contests on user(s) profile(s) are not recommended, but if you have permission, then it's fine. if they tell you to stop, then don't advertise. There are a lot more ways to get noticed on a contest, than advertising contests on profile(s)