Estimate the scale of the system you are going to design...
Defining the system data model early on will clarify how data will flow among different components of the system. Also you could draw an ER diagram using the diagramming tool to enhance your design...
We need APIs for signup, login, URL converter. We need DB to cache most common URL redirect and to store longurl and short URL. We would need a load balancer to distribute the traffic and some monitoring and analytics in place. The URL convertor logic will use MD5
Explain how the request flows from end to end in your high level design. Also you could draw a sequence diagram using the diagramming tool to enhance your explanation...
Dig deeper into 2-3 components and explain in detail how they work. For example, how well does each component scale? Any relevant algorithm or data structure you like to use for a component? Also you could draw a diagram using the diagramming tool to enhance your design...
Explain any trade offs you have made and why you made certain tech choices...
Try to discuss as many failure scenarios/bottlenecks as possible.
What are some future improvements you would make? How would you mitigate the failure scenario(s) you described above?