I am looking at doing the South Dakota Kayak Challenge this year. It is a short race that is about 75 miles long. I currently paddle a Native Ultimate 14.5 but I am not certain if this is something that would be suitable for such a race. Is this a suitable kayak for such a race or what are some suggestions for a touring kayak that are between 500 and $1500 that would be semi competitive?

your size is going to be pretty important in selecting the right boat. What kind of water is involved in the 75 mile South Dakota race?

I googled images of the race and people are paddling modified surf-skis or racing kayak but there are also big fat plastic boats too so I can assume there are two or maybe several classes. What you get, depends on what class you want to compete in. Race boats are very tippy and take some time commitment to learn to paddle but are WAY faster. If you want a not-so-tippy, non-race boat that is still reasonably fast, then a long-skinny touring boat is your best bet.
Here's a list of kayaks and how they are rated for speed. It can be useful as you look for a boat. The rating is just the waterline length/width. The higher the number, the longer, skinnier and faster.
http://soundrowers.org/BoatClasses.aspx
I would find out what the boat classes are if you end up getting a fast touring boat. Better to be in a fast boat in the slow class than a slow boat in the fast class.

My only comment to the above post is that there is often a lot more that determines the potential speed of a kayak than just the raw water line length to width ratio. I have paddled boats that by their length and width, one might conclude they should be fairly fast, but for various reasons they seem to prematurely hit a wall.

I'm not a racer, but it seems to me that it would be very important to have a boat that is fast but also handles well in all types of water and wind conditions. That might take a good deal of time in the cockpit.

You're right there is more to it, but it's a reasonable rule of thumb. And of course that's waterline length and width not overall. Lots of long british or greenland style boats have a fairly short waterline length (and low length/width ratio) because of the long overhangs. I should add if you can find a Sea Kayaker magazine review of the boat you want to buy that would ideal as they include speed vs. drag and stability curves for the boats they review.
In addition, lots of race directors use soundrowers boat classification method to determine kayak classes. That's why I included it.

The touring kayak has to fulfill a number of sometime contradictory requirements of which the two essential ones are safety and comfort. Next come speed and maneuverability, which are important as well but not critical. So choose the one which is best for you according to your needs.