I had a poke around with some tweezers and found that the 'worms' are quite hard and brittle. Also they don't seem to move. I think that just confirms what you said.
I will try to increase the flow some more, but it is already pretty high with a tunze stream 6100... ATM I am battling an algae problem, and I think some of the algae I clean off the glass may be settling in the folds of the coral and rotting, and that may actually be the main cause of the problem.
Anyway, thanks for your help - I should be able to sort the problem out now.
Thanks again,
Michael.