Sandy, I wouldn't call it normal, but what it is, I don't know. It could be a parasite or commensal. It could be a virus or a cancer. Maybe someone else has seen this and can report back. How long have you had the coral and when did you notice this?
Also, what is the NO3, PO4, etc. I doubt they have anything direcly to do with it, but one should check all options.