Once the tank was cycled...did you do a large water change? Cycling builds lots of nutrients in the system, if you didn't do a water change, the the alagae bloom would be expected.
Rather than distilled water, you should try to use RO
water. These are more pure than distilled and most distilled water is distilled using copper tubing, which can leach into the water.
What kind of algae is it? Is it a rust/brown colored dusty algae?