For starters, 1.0 nitrite is highly toxic. Butterfly fish tend to be very difficult fish to keep. They are very sensitive to water quality and can be hard to feed. These are not a good beginner fish.
What kind of damsels? Most damsels will be quite aggressive, and in 30 gallons can be expected to harrass most other fish.
You really need to get your water tests done asap. Most of the answers will be found there. With saltwater, especially a new tank, expect to test water quite frequently for ammonia, nitrite, nitrate, pH and calcium. All of those tests are needed to determine the exact problems (to which it sounds as if there are many) and to tell us how best to fix it.
If water quality is a problem, which it sounds as if it is, then small water changes (25%) every other day can help a lot while we're trying to figure things out. When doing water testing, always test water before a water change, never after. I hate to say it, but I really don't see a lot of hope for that butterfly, or the shrimp, under these circumstances. The sooner we know your test results to all of those I mentioned above, the sooner we can help you and your fish.