Sorry TJ, I thought you only had the coral for two days. I think I misread your first post.
You can try rubbing the sponge off, with the coral held in a bucket, using a child size toothbrush.
I have a yellow sponge encrusting on a galaxea and I know it is causing problems, but I havent figured out how to kill the sponge yet.
Also, are you target feeding it?