Wow, that's one way to start with saltwater -- jump right in!
OK, first thing's first, how much have you read up on saltwater tanks? You're in the right place for a lot of great advice.....go the the section for beginning aquarists, and there's quite a few excellent sticky threads for you to go through. I strongly advise you read them.
Now, before we even get to cycling, may I ask a couple questions? First, I see that you have an overflow and what appears to be a sump set up. That's great! But, why is the protein skimmer not hanging off of the sump? Part of the beauty of a sump is that you can hide all the crap that you would normally have hanging off the tank -- heaters, skkimmers, hob filters....everything can go down there! If that skimmer won't fit in the sump, you may want to consider getting another model. In fact, you may wish to do that anyway: I don't own that one, but I've heard people complaining about its effectiveness. I'll let others chime in on that subject.
Second question I have for you regards your light. Again, looks like you have a great light for your setup......3 metal halides, looks like? But....WTF do you have them sitting on?? Is that a 2x4 just sitting across the tank? When I saw this, I have to admit my ass clenched a little here! Imagine what would happen if someone knocked against the tank, and the wood flipped over....there goes the light, into the tank! I hope I'm overreacting here, but if those 2x4's aren't secured in some fashion, find another way of suspending your lights please! You'd be heartbroken if that crashed into the tank, killing the fish.....
All right, thanks for listening to my worries. As for your cycle: yes, that's the word. Your cycle "conditions" the tank by building up colonies of nitrifying bacteria. This way, ammonia in the tank will be converted to nitrite, the nitrite will convert to nitrate, and the nitrate will be broken down into nitrogen which escapes freely. But you probably knew that already. If your ammonia is as high as you say, then yes, you're definitely deep into the first stages of the cycle. What did you use to kick off the cycle -- was it the die-off from the live rock, or did you use a shrimp.....?
You should definitely do a water change. The ammonia doesn't have to be THAT high. Now you just need to continue watching the levels for nitrite....that one should begin to rise as ammonia drops. Next, a high nirite reading will begin to drop, and nitrate will begin to register. When your amm. and nitrite levels have dropped to 0, do a decent water change and test for at least another week.
Oh, and most people recommend that you keep the protein skimmer OFF during the cycle.
Well, that should answer your question a little. Remember, don't be afraid to ask questions on this site....people here are really helpful, and there are quite a few very experienced hobbyists who are willing to lend a hand. Good luck!