I would add some Prime or Amquel or the like right away. Ammonia can damage fish even if it doesn't kill then. That said, the kit might be a bit off. Ammonia kits are infamous for being a bit too sensitive or failing and reading ammonia in everything. You could try testing some distilled water.
The nitrate level is fine for fish, although it might cause problems or coloration changes for some corals. The alkalinity is fine, too.
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Jonathan Bertoni
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