I've created many sandstorms in my tank, never has anyone died. There has to be something else going on. Think of the ocean, sand gets disturbed all the time, fish can handle the sand.
Sorry everyone died
Using tap water is not going to kill them either. If your fish are laying down or looking bad then for goodness sake make up a batch of saltwater with tap if that is all you have. Use something to remove chlorine and match temp and salinity quickly and get the fish in the bucket.
Did your inverts die too?