That sounds like 'fuzzy tipped algae', which I am begining to have a problem with. Evidently, it is prevelent in the keys, and probably got into my tank from some TBSW live rock that the previous owner had. I sent a note to a couple of the cultured rock companies, and they are familiar with it. Unfortunately, they don't know of anything that eats it nor how to stop it. I recommend mechanical removal before it starts to get out of hand as it has on my rocks.
I received the following reply to my question from Edie at reeftopia:
Hi Phil,
To the best of our knowledge it does seem to be fuzzy tip alga.
It has never been a problem in a reef tank that we know of so we do not have the experience you are looking for. But................we can tell you what we do know. This alga is noticed by our divers growing on the reef as summer is setting in and the water heats up. So one remedy may be to cool your water to 74 degrees or below and that should at least slow the growth down. The book we have says that it often grows in shaded areas, so more light?.....................We also see it growing on the edges of our canals in shallow water in full sun so the book theory doesn't go along with what we actually see happening.
The book does not give any information on how to rid yourself of the fuzzy tip alga.
I even did a quick online search and came up empty handed with the exception of one site that gave a listing of algae's and then a list of pest algae's and the fuzzy tip algae was there but not on the pest list. So at least it may not be sucking valuable nutrients from the water.
Our expert hears says that he would try emerald crabs, doesn't think snails will touch it.
I'm sorry we don't know more but, would love to hear updates on how your doing and if you find something that works.
Edie/Reeftopia