Vermetids are usually not a big deal, but they do cast a web to catch particulates from the water column, which can sometimes irritate neighboring corals. I have a hard time thinking they would irritate a Torch coral, but it is something to keep an eye on and decide for yourself.
The tissue of each polyp is a the tip, with very little tissue on the skeleton. Normally you'd see 1" of tissue on each branch leading up to the polyp. Feeding the heads at night may help encourage more growth and perhaps the tissue will grow back over the skeleton a bit. At this point, those polyps are solely at the tip, not really all that anchored to the coral. Is this what the looked like when you purchased it, or has it gotten to this point on its own?