Yes, MB7 works very well with bio pellets. We just had a big discussion about this on another recent thread.
http://www.canreef.com/vbulletin/sho...737#post837737
I use the Vertex UF20 and it works great. I adjust the flow so that the pellets just tumble slowly. Maybe you have your flow too high and it forces the pellets all to the top. When I add new pellets, I sometimes get some that float to the top (trapped air not shaken loose) and I will adjust the flow quickly from stop to high flow a couple times to get them to sink back to the bottom again.