High nitrates by themselves aren't going to kill anything, so no worries there. pH normally doesn't skyrocket up, so I'm guessing maybe testing error - you said they were newbies doing the testing.
Your salinity concerns me. As far as putting in 1g of freshwater in a 10g tank... that's a pretty big shift all at once. If your salinity was 1.027 before that "top off", putting that much freshwater should've dropped it to 1.024. That's way too big of a jump all at once, and if you see problems with your fish in the next day or two, I'd guess this was your culprit. The other issue, as others have mentioned, is the hydrometer. Those swing arm things just are a bugger to use and get a consistent reading. I know your LFS
is out of refractometers, but I wouldn't make any major salinity changes using a hydrometer.
If I read your post right, your LFS
gave you more bad advice by having you top off with saltwater. You want to replace the water that has evaporated with freshwater... not saltwater. Reason for that is because the salts don't evaporate... just the water. So if you top off with saltwater, you just end up slowly increasing the salinity.
It doesn't really sound like your tank is crashing, but it doesn't sound happy either. Part of it is just learning the ins and outs... like testing and topping off daily with freshwater. And it's just so much harder with such a small tank - even if it were stocked reasonably. It sounds counter-intuitive, but it really IS easier to start with a big tank than a small one.
They said the fish were okay because they were very small (which in part is true. The two clowns were only about 1-1.5 inches.)
This is just plain not true. Even 8 tiny fish in a 10g SW
tank is just plain too crowded. Period. I know you know that, but it's just so so wrong that this shop thinks 8 fish in a 10g is OK.