I am battling the same problem now too. Take a look at the picture of this on my thread:
http://archive.reefcentral.com/forum...readid=1216062
Someone suggested that it is a brown jelly infection. I did more research and it sure sounds like it. It might be a similar problem. And when I vacuum the jelly and dead tissue, the smell of the water is horrible. I just did a 30% water change this morning and hoping it won't spread.