White fuzzy stuff certainly sounds like a kind of fungus to me, but check this site out here and look at the pictures. It may help you diagnose your problem:
http://www.2cah.com/pandora/Disease.html
My betta had fungus a while back, but he pulled through. I had good luck with simply keeping his water immaculately clean and dosing with Pima/Melafix. Increasing his water temperature a bit seemed to help, too.
I think if you went this route, the fry would be okay, since the 'Fix family of medications seems to be relatively mild. I'm not sure about that, though. I think you would be okay to remove the fry to be on the safe side, as I am under the impression that fungus isn't something that requires a whole-tank treatment, per se, beyond maintaining ultra-clean water conditions.
Maracyn medications seem to be highly recommended, too. Medications like that and others by Jungle et al. may be harsher on the fry, though. But again, I'm not certain. The most important thing is to keep the water really clean, I think.
ETA: It just occurred to me now that I should clarify what I mean when I say that my betta had fungus-- what he had was probably Columnaris, and I suspect that's what your mollies have as well. However, I'm somewhat in the habit of just referring to it as "fungus". Body fungus and columnaris are actually different diseases, but are so frequently confused with one another in layman discourse that they're nearly interchangeable in my mind unless one wants to speak very precisely. So yes, do look at the Columnaris section of that site I linked to. Sorry to be so utterly confusing.
