There could be several things happening.
1. Your PO4 and NO3 could both be zero, and of course the chaeto has no food source. If you have any algae in your tank this is not the case.
2. Not enough flow. Chaeto does MUCH better under high flow, but the flow must be laminar. I have a 40X flow through my fuge, and it does very well, while keeping both my PO4 and NO3 at 0. I put some in my overflow, and it grows even faster than it does in my fuge at 40X.
3. Fe could be a bit low
4. Light should be no higher than a 10K.