damping off

Can anyone give me advice on this? I recently started a 2'by2' sfg using Mel's MIx bought from SFG Hawaii. I chose to plant beets, Manoa lettuce, daikon and bush beans. All came up and did well until the beans started wilting and dying at 8" high. The only other symptom was a shriveled stem. A knowledgeable neighbor says it is second stage damping off, caused by a soil-born fungus. Googled info says I need to take out all the soil of the entire sfg and other gardens will be attacked by this fungus, but other info says the situation could be saved by addition of vermicompost. Can someone suggest my next move? Also, damping off can be caused by overwatering (which is what my mistake probably was) and crowding. Since we sfg advocates plant our veggies close, I wonder how common this problem is for sfg's. Someone said I should have planted veggies with similar requirements i.e. beans and lettuce are not particularly compatible in water needs. But how complex do we want sfg to get? One of its appeals is its simplicity.

Any comments?

The SFG book says overwatering is not possible in an SFG. That's the full extent of my opinion. If vermicompost works, why not buy some worms and some vermicompost and throw them all in? Mel's Mix costs too much (I can only imagine the goiing rate in HI) to have to dump it and start over!!! I sure hope someone has more solid info for you! Good luck!!