New 29g questions.

Take the undergravel filter out. Also take the media out of the Power filter and use it to circulate the water. Either get a protien skimmer, or keep a small bio-load and do weekly water changes. Even if you get the skimmer the bio-load should be small and you should do water changes, but its more forgiving and it makes the parameters more stable. It does allow you to add more fish, but you cant have a lot in that small of a tank. Putting liverock in during the cycle can be good and bad. It will kill off any unwanted critters, but you also might lose some cool creatures on the rock with it. I cycled with my liverock and my tank has a lot of life in it from the rock. I got some additional live rock since then and it has made a huge difference, but it was good before too. I dont know much about substrate, so I just used all livesand too avoid any problems.

If you feel bad about the damsel, take it back and add a few cocktail shrimp to the tank and let them decay away in the tank so in makes ammonia that the beneficial bacteria can use. Also, damsels are extremely territorial and will attack just about anyother fish that goes into the tank. I had a clown and a damsel together and the clown did actually boss the damsel around. Then i added a chromis and the damsel went crazy and tried to tear in to peices. So if you want to cycle with fish, try something else becuase you wont beable to keep much with the damsel. Unless you like the damsel then keeping it is fine, but it restricts the variety of tankmates that would be possible.

It is also a PITA to catch fish once all the rock is added. I had to tear apart my aquascape to catch mine.

Don't use playground sand because it is made of silica which is not good for an aquarium. Use sand that is collected for aquariums because looks better and since it is made of aragonite it keeps the ph more stable and keeps the calcium levels a little higher. And some people have lowered their nitrates by keeping the undergravel plates. It creates anaerobic condition that turn nitrates into harmless nitrogen. But I have not personally tried this and am not certain it works.

Silica sand like play sand is just as good and as safe as any other type of sand out there, the only problem with silica sand is it tends to contain more free silicates which feed diatom algae, but once all the free silica is depleted it settles down, and it wont buffer the water which isnt much of a big deal since calcium carobonate sands (like Aragonite) dont buffer much as well (the PH has to be REALLY low for any serious buffering to happen)

Similarly,

You don't need the plenum (undergravel plate) to creat an anaerobic zone to reduce nitrates. 3"+ of sugar-fine sand or deeper will work just fine. Any kind of sugar-fine sand will work. The advantage of playground sand is that it comes by default with a wide range of particle sizes. Since most of the microfauna that lives in sandbeds is choosy about the size particles it lives on, this variety gives you a greater range of potential homes for whatever types of microfauna you might get from live sand and live rock.

As Gealcath said, silica sand isn't bad. It isn't quite as good as aragonite, but it's not the slightest bit harmful, as neither diatoms nor sponges are harmful and that's what it will encourage to grow for a while. Aragonite will dissolve at pH lower than 8.2, which gives a tiny bit of buffering and calcium, but not enough to make a huge difference most of the time. Other calcium carbonates generally dissolve around 7.6 pH, IIRC.