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What other fish are in the tank? Has he been in the tank long? I had one a few years back and he was kinda crazy and very aggressive, but it took him time after I added him before that happened.
You shouldn't have food on the sand - only feed very small amounts so the fish can eat it before it lands. I've never had food on my sandbed. You mean your damsel hides in the rock and you can't see it?
Mine does that too. Now he will come out if you are about ten feet from the tank. If you approach him, he will go back. Had him for almost 9 months now.