Those skimmer are finicky - prone to overflowing. Since you have it as a hang-on it will make your floor wet. You should have made the baffles in your sump lower so that you could put the skimmer in the sump, so when it overflows it just goes back into the sump. I'd rather have the skimmer in the sump than have a refugium. I also would not have put sand in the refugium - since it not a DSB (not just as simple as just adding a bunch of sand) all it will function as is a great place to collect detritus and pollute your tank. IMO, I'd redesign the sump, get that skimmer in there - number one priority. The skimmer itself should be fine for that size tank.
What type of LEDs do you have? Four T5s is plenty of light for a 40-gallon breeder tank. I'd just skip the LEDs or turn only the blues on. Is the LED adjustable in color/strength?
I agree with Brad that you should probably lower your lights. If you want to put SPS in there they will go at the top, and in general they grow much faster than LPS corals, so they will grow out of the water in no time.
As far as the cycle goes, I'd strongly recommend you use the product called Prodibio Start Up. Just buy the one small pack (about $25-30) and follow the directions for the amount to use until you run out. For a tank starting with dry rock, it will really help with the good bacteria population.
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~ Mindy
SPS fanatic.
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