I'm wondering what you put in the tank at first to cycle it? The process is generally to add the sand and live rock and then wait for the tank to cycle. The live rock is essentially your filter. It is all the bacteria which build up on, and in, the live rock that break down the ammonia. Cycling is the process of building up all of those bacteria so that they can handle additional waste entering your tank. So, if you hadn't put the live rock in your tank wasn't cycled.

Don't worry about it though. Once your ammonia levels have gone down again, and stayed down, your tank will be cycled. Be sure to check for nitrites too, like unmeg mentioned. Nitrates aren't so bad. They can cause algae to grow which is a pain in the ass but won't really do any harm to the fish or corals. Nitrites, however, are a different story.

Damsels huh? I just hope you got them because you liked them and not because that's what the guy at the fish store said you should get first. I actually thought they were pretty cool and had a couple that lived for as long as I had my tank. If I had to do it again I wouldn't have gotten any, however, because they can be bullies and will limit what other fish you can add. Still, they're pretty cool, I especially liked my yellow tail. I think you can even see her in one of the pics I posted early.

Anyhow, good to hear things are coming along. Keep us posted on your progress. Damn I'm jealous! I want a new tank too.