Drop the damsel. He'll get too aggressive and too big for that tank.
Just my opinion, but I agree on the Royal Gramma or Blackcap Basslet.
You might also consider the smaller Gobies. A red or purple Firefish, maybe a Yellow Watchman...
Also maybe Reef Chromis, a Sixline might work but will be pushing it, a Blenny, Bangaii Cardinal (or a pair), maybe a spotted Hawkfish.