That algae is just a harmless thing that happens a lot in new tanks, and you can ignore it. If your ammonia really is at 9 (ppm? mg/L?), then that's your real problem.
Here is an image to introduce your to our friendly neighborhood nitrosomonas and nitrospira bacteria: http://www.fishkeeping.co.uk/images/cycle_diagram.jpg
They live on the surfaces of things, for example on the sponge-like material or pumice-like rocks in your filter. They convert ammonia to nitrite to nitrate for you, and are one way to reduce the amount of deadly ammonia in your water.
Now look at the graph that is on slide #8 of this presentation: http://www.aces.edu/users/davisda/class ... Design.pdf
Do you see how on that graph on slide 8, when you start out, you're weeks from having the ammonia and nitrite drop back down to zero? When the ammonia and nitrite drop down to zero after being high, and the nitrate is continually rising, that is called a 'fully cycled' tank. AKA there is a way for the ammonia to leave the water as soon as it is made, and the fish are never exposed to anything above 0 ppm ammonia. New tanks lack the necessary number of beneficial bacteria needed to convert the amount of ammonia being generated into nitrate, so it accumulates. When it reaches around 4 ppm the fish get sick, and you get deaths from what fish keepers sometimes refer to as 'new tank syndrome'. Weird algaes also bloom during this period because of the strange water chemistry not found in any natural water body. In the wild, the ammonia is very tasty to plants and bacteria, which argue over who gets to eat it first. But unless you have live plants or a large number of the bacteria in your tank, the ammonia just sits there. It won't degrade itself.
Ammonia is toxic to fish, so what you want is, as quickly as ammonia is made, immediately convert it to a less harmful form. That's what the beneficial bacteria do by converting it first to nitrite (which is less toxic than ammonia) and then to nitrate (which is less toxic than nitrite). That's what plants do by incorporating the ammonium into their new leaves and tissues. They remove the ammonia from your water, which is good for the fish. I don't know how your ammonia is at 8 ppm or mg/L and the fish are still alive. Honestly I think your test kit must be broken, because death usually occurs around 4 ppm.
But anyway this is info you need to hear. The Ammo-lock stuff is designed as a short term fix to convert the ammonia into a less harmful form that won't kill your fish. Because usually when ammonia reaches the level you claim to have, the fish die. Fry are especially susceptible to dirty water. They stop growing and can get fungusy and basically it's bad news for them. Anyway, that product is a short term fix for ammonia, as is performing water changes to dilute the ammonia concentration. The only long term solution that is truly sustainable is either to have a large enough population of bacteria to immediately convert the ammonia to nitrite and then to nitrate, or to have plants which immediately eat the ammonium and pull it out of your water and into their growing tissues.
Here is an article about ammonium uptake by aquatic plants: http://theaquariumwiki.com/Plants_and_B ... Filtration
Plants can also get rid of ammonia for you. They like to eat ammonium; it's their favorite food.
By the way pea gravel is awful stuff, and the vast majority of plants you put in it just die. That's why I use kitty litter instead, the kind that's pure ground baked clay with no added scenting molecules.
If you're interested, here's a link: http://www.thekrib.com/Plants/Fertilize ... jamie.html
Here's a picture of my ten gallon tank, which uses kitty litter and has all live plants: http://img.photobucket.com/albums/v415/ ... pytank.jpg
So, here's the main point:
The brown stuff won't hurt your fish. The '8' reading of ammonia is probably not in ppm or mg/L, or your fish would be super super dead. Ammonia kills fish pretty well. It's good at that. That's why we put live plants and filters on our tanks. The filters house beneficial bacteria, which eat the ammonia and poop out nitrite, and a different species of bacteria eat that nitrite and poop out nitrate. The plants directly incorporate ammonium into their new leaves, but will deign to use nitrate if there's no ammonium present. Long story short you need to read a whooole lot of information about the chemistry behind fishkeeping to really know what you're doing if you want to see more fry. Babies are fragile, and if you want to breed fish you're going to need very, very clean water. It's easy if you stuff the tank with live plants, which grow well in the kitty litter I mentioned above. Don't expect dense plant growth in your pea gravel, unless you use rootless plants, which severely limits your selection of plant species.
I hope that makes sense, and if you have any more questions just ask me. These people on this forum are pretty darned smart too, but they type shorter responses than I do XD
Edit: Oh yes, and I see you asked about the fancy goldfish pooping a lot. That's because they don't have true stomachs. They can't store food as well as other fish and basically have to eat way more than other fish would, pooping more. It's like you get the waste load of five fish and only one to look at. Goldfish are my least favorite fish for that reason.
I was about to link you to a picture of goldfish anatomy to show you their stomach-like organs, but I realized I don't know your age or the age of people reading this thing, and it's pretty icky. Google image search it yourself if you want, but I think the inside of a goldfish is pretty gross.