hundreds of little white worms...

I don't have "Jungle Water Clear" at hand to know whether it's an oxidizer or a flocculant. Does it turn the water magenta purple at first? Does the container mention any ingredient?

Your worms are nematodes. They have had a nasty surprise, which has dislodged them, maybe from your filter. They are harmless and tasty .

Do you have a canister filter? Your filter needs to be rinsed more often, and you need more splash from the filter return. Step up your weekly partial water changes: siphon off all over the surface of the gravel without disturbing it much (Others like to get right in there and stir it up a lot...)

Oxygen will clear most skanky odors.

Those little planaria worms are an indication of a protein surplus. It is caused by overfeeding, and is most common in cichlid tanks which are fed protein rich food too often such as mealworms, crickets, etc. They usually feeding in the gravel or filter sometimes moving up the glass to feed on the protein film. I agree with what Ryan said, those chemicals must have upset them and they set themselves free. Usually cutting back on protein rich food with a good gravel siphon and water change will see them disappear within a couple of days. You'll have to then pinpoint the source of your problem, such as feeding, insufficient schedule of gravel siphoning, or perhaps even inadequate filtration for the amount of fish. I'm sure this problem has occured to nearly every cichlid owner at one stage or another! (It happened to me once, and I realised it was because I fed mealworms too often).

Ok, I don't have these but I am curious - where do the worms come from? Obviously you don't see them when you get water from your sink. Are they micrscopic and grow from the excess protein food in the tank? or are they introduced to the tank in some other fashion?

i had a nice worm outbreak after a lady at work gave me some anacharis [Sp?] from her outdoor goldfish pond.