any ammonia at all is way too much ammonia. it's not even at its peak yet...it will get worse.
as for live rock, people have different preferences, but the standard amount is 1-2lbs per gallon.
Don't add anything else to your tank at this point, it will only prolong your cycle and make conditions worse for your fish. If they make it through the cycle it will be a near miracle, and they won't be any better for the wear, unfortunately. Until recently people were cycling their tanks with damselfish until enough research and experience illustrated the perils of doing so - the fish were basically being burned alive.
If you can remove the fish from your tank, I urge you to do so. It would THEN be a great idea to add as much live rock as you'd like- the die-of from the rocks would be plenty to get your nitrogen cycle going, and it would also speed up the process.
If you can't return the fish, then I would suggest just leaving your tank alone - don't change the water, don't add any chemicals. DO test the water, once every other day at the same time of day. This way, you'll be able to track the ammonia levels and you'll know for SURE wether or not it's spiked yet. Once it reaches its peak, you'll see it start to go down - once you have NO more ammonia, and NO more nitrites, and VERY LOW (preferable under 20) nitrate, you'll do one huge waterchange (50% if you can manage it), and then you're on your way. After ur cycle, and after your water change, you'll want to continute adding things SLOWLY - one fish at a time, with a few weeks between each addition in order not to overload your biofiltration with too much ammonia at once.
For future reference, it's best to use Distilled water, or water purified through Reverse Osmosis (purified drinking water available at drugstore, supermarkets, walmarts, etc). I know tapwater is absolutely perilous - FAR too much phosphate, copper deposits, and all sorts of other things those "tapwater purifying" chemicals just can't get to. I'm not familiar with well-water, but I have a feeling it's not much better.
I would also suggest buying the book "The Simple Guide to Marine Aquariums" - I found this VERY helpful when I started out, and I still reference it constantly.
