How do you properly cycle a tank?
Once set up you need to add some source of ammonia to your tank, even flake food will decay or any other dead item that decays will create ammonia. I have heard of people using a cocktail shrimp. In your case the small amount of live rock you added along with maybe some flake fish food should be enough to start a cycle. Test for ammonia.....once the beneficial bacteria take over it will convert the ammonia to nitrite and then to nitrogen, this is the cycle. You will test first for ammonia, then when the ammonia is zero you should have measurable nitrites, when both ammonia and nitrites read zero for a few days you can consider your tank cycled. This means the beneficial bacteria are in sufficient quantity to convert any ammonia (fish waste, rotting food, and other detritus) to nitrite and eventually nitrogen posing no risk for your inhabitants. At that time you can usually add a clean up crew of snails and possibly reef safe hermits etc. as you may notice diatoms etc at this point. After these guys are settled you can start to add your fish, which should be quarantined against disease prior to adding to the display. These should be added with the most docile ones added first and the most aggressive added last. You want to add them slowly over time giving the bacteria population time to adjust to the additional bioload. whew, sorry I am long winded.
What would be the correct light spectrum for that size of tank?
The correct spectrum for a fish only tank is unimportant, but if intending to add corals you will want a minimum of 10,000 kelvin as it represents daylight , this can be supplemented with actinics for balance adding blue, or you can go with a 14,000k which is a bluer light.
I can always add more live rock as I go right?
You can, but adding rock later may cause a mini cycle to start as there will undoubtedly be some die off on the rock due to shipping or time out of water, unless you buy cured rock which you know is cured and it is kept wet during transport.
Now I do have 2 mushrooms in there also will they do ok?They have opened up real nice.Is there something I need to be adding to the water for them?
They may very well be fine.....You don't need to add anything just maintain a regular water change schedule. The only time you would need supplements is if you start stocking more calcium demanding specimens such as stony corals etc. which will require strong lighting and usually a stable water parameters.
So what should I do to move the sand around so it won't compack?
Get some sand sifting snails such as nassarius which will turn the sand, also you can stir the top bit up during your water changes.
Guess I kinda went off of the deep end didn't I.I'll learn from my mistakes and hope to get more help from you'all as I grow in the hobby.
I really appreciate all the info that all of you are giving.
No problem, my advice is to read as much as you can, I have a couple of books that were my best resource they are "The New Marine Aquarim" by Michael Paletta and "The Concientious Marine Aquariust" by Robert Fenner. both are excellent resources as is
www.WetWebMedia.com
Good luck and maybe before buying anything you should research it thoroughly and know it's husbandry needs etc and compatability etc before you buy it......heck ask us on here, most of us have made the same mistakes....