My daughter set up the water, and has ph, salinity & temp in correct ranges, and zero ammonia.
A newly set up tank will not naturally have ammonia in the water. This will not exist until you have some sort of bioload in the tank.
She added something to start a beneficial bacteria culture, then let it stabilize for a couple of weeks.
A bacterial culture, if it even worked, cannot exist without food which kinda seems like what you did with the tank. The bacteria process ammonia and nitrite (and nitrates if you use a deep sand bed) by consuming it....yet they also require this feeding to survive. If you let the tank "stabilize" for a couple of weeks without feeding the bacteria with some sort of bioload, most probably starved and died.
We've tried several batches of 1-4 small damselfish, but they have all died within 2 days, most the first day.
Interesting, damsels are normally pretty hardy. My guess is similar to the above mentioned....that you maybe did not acclimate them before adding them to the tank. Fish can be hardy, but different PH's and rapid salinity changes stress even the hardiest of them (For example, if the specific gravity of the LFS water was 1.019 and your tank is 1.025...this is very stressful if not acclimated properly).
Local aquarium shop tested a water sample and said it was OK.
With them dying so quickly, they are probably not even contributing any bioload (excreted ammonia, uneaten food, poop!, etc.).
My best advice would be to not add any more fish. My hunch that your tank has not cycled at all. Fish are not even needed for this, anything that will create bioload will work (many, many people use cocktail shrimp...I would put in several). There are two benefits to this. One, no fish are harmed to cycle the tank (ammonia and nitrites are very hard on fish). Two, many people for forced to remove damsels after the cycle is complete. This is due to how fiercely aggressive they can be, yet removing them is not easy and many tanks have been torn down to get to them
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If you are unsure of the whole term of "cycling", I will try and some it up for you as concisely as possible. Bioload (cocktail shrimp) is put in the tank and ammonia is produced as the shrimp decomposes. Bacteria form (an inoculation as you did before could shorten the process, but is not necessary) that consume the ammonia (toxic to livestock), in turn converting it to nitrites (also very toxic to livestock). Other bacteria populate the tank and begin consuming the nitrites, in turn converting them to nitrates (fairly harmless). Once the bacteria are formed, your tank is performing the "Nitrogen Cycle" as ammonia produced passes through the chain and is removed from the tank via water changes, macroalgae, etc. It is not an immediate process, as the bacteria often take several weeks to establish themselves to the point where ammonia and nitrites remain 0ppm, your tank will go through two main spikes: first ammonia, then as it returns to 0ppm the nitrites will spike and then return to 0ppm. This initial "cycle" can take up to 6 weeks. You will want the test kits to measure this as it occurs.
Once everything is solidly 0ppm, you can start adding livestock....SLOWLY!
Since your tank is not really started, I would put some thought into not using crushed coral. While it is by all means a workable substrate, it requires maintenance (vacuuming, etc.) that is not required in other substrate like sand. Cleanup crews of various snails, hermits, and other micro and macro critters will eat the algae and detritus created in the tank. However, in CC, most of the crew cannot reach it because of the coarse substrate and it sits and produces nuisance algaes instead of being cycled back into the system by the crew.
I hope this helps.
