Hey dude, your tank will be cycled when you test 0 for ammonia, nitrate, etc..I was once adviced to use Seachem's Stability to aid in the cycling process and it did in fact help. Your damsel, depending on its size, won't be a problem, I kept mine and he's doin' fine, when I add a new fish, he tries to act tough and what not, but gets over it
As for your LFS using a "test strip" not sure how much you can trust that guy...mine LFS guys use Salifert and test my water free of charge and won't sell me a fish if my water parameters are off. Trust your gut, if your red sea test is reading a 0.1, go with it. I have the same test kit. Once your tank has cycled, take it slowly, add a fish and some cleaning crew...go slow, do not populate your tank too fast.