Hi there, I'll give my answers, but others may have other opinions...
1 - is it possible to have too much live rock?
Yes and no. Yes, if there's so much rock, you can't see the fish. No, you can cram as much as you want in there. As much as will fit, at least, and then you can fill the sump full of it too. The systems won't care, as long as there's enough to work. Personally, the more, the better. (I have about 350 lbs in my 135.)
2 - how deep does a sand bed need to be?
I'd say minumum 3", better 4-6 - if you're going for a "
Deep Sand Bed."
3 - if necessary, how do you add sand to the tank
There are a couple of ways. You could just dump it in, but you'll have a sandstorm for weeks. Better methods involve pouring it into a PVC pipe than extends down to the bed, and similar ways to minimize disturbance.
4 - can you add shrimp/crabs, etc to a 5 week old tank and will they live in harmony with the tank-cycling damsels
As long as the tank is cycled, and it should be at 5 weeks, yes. However, it is unnecessary to use damsels to cycle a tank, and not generally recommended at this point. Most people frown on the practice, as it causes more problems than it solves down the road. (Better to use a bit of cocktail shrimp...) I think what you're trying to ask is if damsels are safe with inverts. Yes, they're fine. Except for the part about them being damsels, of course.
I hope that helped,
Danielle