For every secondhand account of emerald crabs eating <whatever> algae I read, I read a firsthand account of them destroying valued livestock. I trust crabs about as far as I can throw John.
Don't worry too much about the tapwater - our water around here is just great. I switched to pure DI water just to eliminate another cause, but I ran for several months with tapwater, skimmerless, and overfeeding as I love to do and the hair algae grew and grew but was really easily managed.
For the sand bed, do you have any current low in the tank? I had a powerhead places about 1/2 way down pushing horizontally.. My sand bed was always pure white. I eventually unplugged it because the suction cups kept giving way and now I'm starting to see a few brownish sections of sand. Hurrah for circulation!
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