Giving honest critique in love takes skill. Sometimes we come across harsher than we mean to. Encouragement, especially for new writers who have just recently gathered the courage to submit their work publicly, is so important. On the other hand, if you're only looking for pats on the back, you'll never grow as a writer. In my opinion, once a member reaches the Advanced and Masters level, he or she should know fairly well who they are as a writer and should be able to accept -- and even welcome -- honest critique more than those in the Beginner and Intermediate levels.
That said, as Christians, we should always be encouraging. Point out the positives first, and then gently move on the the areas we feel could be improved. Most importantly, keep in mind that while pointing out grammatical, punctuation, or technique issues, simply "liking" a piece is subjective. I know more than anyone how difficult it can be. We all want to be validated. I was placing regularly in the Challenge, and on the weeks I didn't place, I was disheartened and disappointed. But that's when I had to take a step back and realize it was my pride talking. I had to realize that as nice as it was to win, NOT winning had nothing to do with who I am. Sometimes that's hard for writers to separate. That's not to say you can't feel disappointed, but only that you remember why you're writing in the first place and choose to focus on growing as a writer, rather than "winning."
If you continually fail to place in the Challenge, my advice would be to pay the couple bucks for a ratings feedback report. This way, you'll see exactly why a particular piece might not have placed as highly as you hoped. There's no guarantee you'll place in the future, of course, but at least you'll have an idea of the areas you could work on. And, like Sherri mentioned, many times the scores are ridiculously close. A fraction of a point may bump you out of the top 10.