just because water is distilled doesn't mean it's necessarily good to use. I have tested distilled water from WalMart where the phosphate was so high that it was even darker than the darkest reading on the test....much more phosphates than water coming straight out of my tap.
if you've got phosphates in your tank, test the water that you use BEFORE you've put it in the tank. if there's phosphates in the tank but not in the new water, then the reason for the phosphates in the tank is something you're doing (ie, overfeeding, too much livestock, too much lighting, bad lighting, etc etc). if the phosphate is in the tank because the water being used has phosphates in it already, then you should do something about the water being used. the best option of course is RO/DI water. second best is RO water. but distilled only is not necessarily better than plan ole tapwater imo.
also, what is your filtration? you just using live rock? a hang on back filter? a protein skimmer? a refugium? a combination of all or some of the above? I think a refugium is a good thing. allows you to grows macroalgae in a controlled space away from the display that feeds off the phosphate that the hair algae would otherwise be using.
