How well was it prepared? (Cleaning?) Did it have a smell to it before you placed it in the tank?
Years ago this happened to me but I collected coral straight from the beach and it may not work in your case, so keep that in mind.
After collecting large pieces of coral, I had boiled them out (dumping water in a 5 gal. bucket) for days and followed by a week of air-drying. I placed them in the tank and within the hour, the water turned yellow. I removed the pieces and they reeked of ocean critters! :x
So, I ended up power-washing them off followed by a 24 hour soak in a strong bleach solution. Following the bleach solution, I soaked the pieces in water for 24 hours- changed the water- soaked again for another 24 hours followed by another power washing. Then I let them sit in the sun for a few days after which, I placed them in an established tank with no fish. About a week later I pulled the pieces out and they had no smell and the water parameters were perfect.
Obviously I went overboard, but it worked. LOL! :roll: :lol:
You need to find the route cause of the problem so two things you should do:
1.) First pull out the driftwood and see if there is any improvement. If so, then honestly, ditch the piece of wood. It sounds like water clarity is your priority so time to decide what is more important.
2.) If there is no improvement (when you remove the wood) then remove the coral and see if there is an improvement.
I hate to say it but I don't think it's going to be a quick fix. Just be patient and eventually you'll have the water to your liking. :thumb: