Hi Ted,

Good to have you with us!
Certainly sounds like Diatoms, one of the usual and expected
Algae blooms associated with new aquariums. With good water conditions, it should subside.
Please tell us more about your tank: lighting; circulation; source water; etc.
If you don't have it already, I highly recommend getting a copy of Robert Fenner's
The Conscientious Marine Aquarist. This is an excellent book for the new reefer and is a good resource for future reference.
Do you have any snails or other clean up critters? A variety of snails will help control any algae outbreaks. Trochus, Margaritas, and Ceriths are good choices; Nassarius are a favorite but like to submerge in the sand and might have trouble with the coarser Crushed Coral.
I would also commend reading these helpful articles and sites:
http://www.thereeftank.com/article/
http://saltyzoo.com:8081/
http://www.wyx.com/iheo/tank/new.htm
FWIW, the Damsel will assume the whole 55 is
his and be aggressive towards any new fish. These guys may be small but can be terrors in the reef!

This might be the best chance to catch and trade him in while the tank is relatively empty.
You might also want to give consideration to switching the Crushed Coral for a
Deep Sand Bed. A DSB of 4~6" will give you addtional biofiltration capacity that Crushed Coral cannot. This would also provide a better home for some Nassarius!
Please see:
http://www.rshimek.com/reef/sediment.htm
Again, welcome to TRT!
HTH,
Dick)