What to do? Opinions needed.

[Bob I]

I am afraid I don't know what Dinoflagellates are, but they may be that brown stuff on the sandbed? I get that in any tank that receives sunlight. That stuff disappears in the evening. However, I grew a Fighting Conch from one to three inches in a year on a diet of that stuff.
As to a cure I have a nano that gets lots of sunlight in the morning, and it was thick with that stuff. I simply removed the sandbed, and that made it go away right quick.
I would strongly suggest the removal of the sandbed. You could perhaps leave a pocket in an unlit corner for the wrasse. At worst you could perhaps find someone to take the wrasse off your hands.