When contracting a muscle will the muscle spindle stretch or contract?
The muscle spindle normally stretches/contracts in concert with the muscle fibres in order to maintain detection of changes in length.  

This image should demonstrate it clearly:




  When the muscle spindle is stretched and excited it sends impulses to the spinal cord more rapidly (increased frequency). The sensory neurons synapse with alpha motor neurons in the spinal cord, which stimulate the extrafusal muscle fibers of the stretched muscle to contract and resist further stretching.
  Contraction of the muscle (extrafusal fibers) would cause the muscle spindle to become slack and stop transmitting impulses, however descending fibers of motor pathways synapse with both alpha and gamma motor neurons (alpha - gamma coactivation) so the ends of the intrafusal fibers contract and maintain muscle spindle sensitivity when the muscle contracts.


Further reading: here.