If your damsel bugs your wrasse, move some of the decore around. The damsel knows every inch of that tank, and where all the rocks are. He sees it as his "home". The Wrasse is an intruder as far as he is concerned.
By moving around the rocks, the damsel know longer recognizes where he is and won't have his territory any longer. Sometimes this works, and sometimes it doesn't. Worst case scenerio is that you end up getting rid of the Damsel. But at least this is something to consider.
Good luck man.