what are these guys

Try waving your hand close to them if they snap back in the rock they are bristles. From your latest images it definitely looks like Bryopsis to me. I would take a small toothbrush and scrub off as much as you can then start a blackout. Good luck your tank looks great. Like the rockwork!!8)
Also if possible you can try removing the affected rocks and scrub them in a bucket of saltwater to keep it from spreading. I didn't do this as I didn't want to remove my rocks but it helps. Is that a crushed coral substrate?

 

vinny what about a emeral crab i've heard they will eat this algae?

 

Bristle stars!!

 

I don't know of anything that will eat Bryopsis. If you get one to eat it let us know.

 

Thanks to all for the replies.

OK Vinny, I shall do that. A few days ago it seemed more brown in colour, (not diatoms as it was more like long grass) and more widespread across the substrate. But the last few days it has all but disappeared, and a few green patches on the rocks remained. How long do you think I should keep the lights out.

Yes it is CC substrate. I only have one marine LFS in the country, and that's all he sells as LS. He has it at a warehouse with a constant flow running over it, the LS and LR seems real nice quality though. I found nothing dead on the LR but lots of life. Is CC bad then? I would have preferred a more sandy sand, but unfortunately I don't have the choice here. Apart form the algae, the tank cycled really fast and seems stable.

Glad you like the rock work, thanks

 

The only problem with CC is that it traps alot more detritus so maintenace on it is a little more then sand.You will want to gently stir small sections of it when doing water changes to keep up with the added wastes it will trap. Don't stir up too much at one time as this will release alot of toxins into the water.
If you are going to try a blackout I would do it until all the green turns brown and it dies. The only thing with the blackout is if you do an extended one you may lose some of the photosynthetic organisms on your LR.Good luck!