I would replace the bioballs with base live rock. My lfs sells it for about 1/3 as their regular rock. It has the bacteria, just no coralline. Then make the section underneath your refugium. I would put the light where it shines right in the circle you drew on the picture (from the side, not above). I would leave the filter pad, but rinse it clean every week or so. It will only trap detritus from entering your sump, but leaving it too long will have the same effect of the bioballs--nitrate buildup from the detritus rotting. I guess you could use a filter bag instead of the filter pad too.