The WP7comp is open to anyone apart from Redgate employees - and even they are encouraged to enter they just can't win.
The initial steps to entering are to register and download the Windows Phone 7 SDK from http://developer.windowsphone.com
Once you have build your application you need to capture a screencast demonstrating its core functions/features of your application with relevant commentary (maximum length of 3 minutes) which you upload to YouTube as well as submitting it using the application process at the competition website.
The entries will be judged by three panels of judges and each panel will award one of the $10,000 prizes.
One of the factors they will take into account is the "social stream", the "buzz" on the competition site associated with the entries.