When u stand a character using frozen outpost is that character still defending that challenge?

Yes.

The general rule is that once a character is participating in a challenge, only an effect that specifically says "remove from challenge" (or takes the character out-of-play by by killing it, discarding it, etc., of course) will actually remove it from the challenge.

So you can't "undo" declaring a character as an attacker or defender by standing it. You also cannot make the character "retroactively" ineligible to participate in the challenge by taking away its challenge icon. Once they are in the challenge, they are in it to the end unless something specifically says otherwise.

Changing the controller of a character also removes it from the challenge.