Well i honestly don't know what you want people to say. Of course 0 nitrates would be ideal for any specimin. I won't say to do water changes, but i will say look at other factors in your tank, although water changes reduces nitrates, if they are at an unusually high level and water changes aren't fixing it, look at other factors causing your issue. Overstock? Not enough filtration? Not changing filter pads enough? Feeding too much? Add too much at one time? Something died lately? You get the point...
IMO 40 is too high for a BTA, i think around 10 and you will be find, but prolonged exposure to anything above say 10 or 15 will definately stress an anemone, and will eventually kill it. Yes i do feel that the water could be a factor in why your anemone is shrivled. I don't know how long it was "big and open" for, so that could be because of inadequate lighting too - but i don't know your setup.
In order to maintain a healthy anemone, you need to keep track of...
Am
Ni
NA (Most improtant)
Ph (consistency is more important than the number, >7.7)
SG (Second most important)
Temp
Copper if you have the kit, but usually you can tell if you are having issue keeping inverts look to copper or a low SG to be the culprit.
