The smaller the food the better. Think brine shrimp size. Throw raw seafood in the blender. Shrimp, squid, fish, scallop, clam, it's all good. Don't be afraid to use selco/selcon either.
Get rid of the other coral in the system. You don't want ANY chemical warfare going on. And with softies in the system, you're going to get chemical warfare, especially if you cut the nems.
I tried this for a while. They were cut with a 6" fillet knife that was sterilized before use. I don't have any pictures of my setup, but it was a custom 60ish gallon homemade tank. 4'x2'x12" tall. It was plywood with a pond liner in it. I had a straight standpipe going to a remote 55g sump. This was loaded with live rock and an oversized skimmer. The return pump was a good size to provide lots of flow.
If you are really going to give this a go, think about replacing your powerheads with an airlift system. You don't want anemones getting sucked up onto the guards.
You said not to lecture you about RODI, but I'm going to anyways... You want to have sterile water with no chance of anything wrong in it. You can't guarantee that with tap water, even if it comes from a good quality source. With a 40 breeder, you're not going to go through too much water, I suggest an RODI. Lecture over!
You don't hear many success stories from people running BTA farms, but I wish you the best. Keep us updated on your progress though.