FWIW, I had something similar happen to my tank. Actually, along exactly the same thing. I bought a used 175 full of Xenia and other softies. I used the old sand and rock when I set it back up. Slowly the Xenia melted away, then came terrible cyano until I shut it down. It sucks.
I wanted to share my theory of what happened and "OTS". First, for whatever reason, dying Xenia has something cyano loves. I say this because of the issues in the 175 I had PLUS I have a 12g nano that serves as qt with a few stalks of Xenia. I've noticed my Xenia I this tank has shrunk quite a bit for whatever reason and I have a couple of patches of cyano. The growth of the cyano and shrinking of the Xenia has been a noticeable trend. The more Xenia I lose, the more cyano I get. I've had other corals die and melt away but none that caused massive cyano outbreaks. I really think it's possible that the Xenia releases some other toxin or chemical that feeds the cyano, so it not just a phosphate problem. Again, this is just my opinion from observations in my tanks.
Regarding "OTS", I think that both liverock and sand are "sponges". Slowly over a long period of time, both absorb phosphate (and probably other contaminants too). At some point there's no more room for phosphate so they start leeching phosphates on top of what you're adding with feedings. One thing I want to do moving forward is replace my sand bed slowly over time. Everytime I do a water change, I suck out some substrate. When it starts getting nearly empty, I'll slowly start adding new sand. With live rock it's not as easy. However, I'm thinking about occasional taking a base rock (any rock with no coral attached) out of the system and replace it with a rock that had been cleaned by being soaked in bleach and them in muriatic acid and dried. The old rock will have the same thing done and get a "bath". So in other words, I'll always have freshly cleaned rock being rotated in and out of the system. The acid should pull out most bound up phosphates. I'm hoping this method may prevent me from ever having to deal with old tank syndrome.
It may be a crazy idea, but it makes perfect sense to me so I want to try. Good luck with the cyano battle. I know it's a real pita.