Hi JennyB, and welcome to TalkingReef. I think you'll find that this is the friendlies and most helpful forum around.
There are a couple of things that jump out at me immediately. Bio-balls in a
wet/dry situation are well know
nitrate factories if they are not cleaned every few days, and cleaned very, very well. the same goes for your canister filter.
While
wet/dry filters are excellent at converting
ammonia to
nitrite and
nitrite to
nitrate, they are incapable of converting
nitrate to nitrogen gas. the short explanation is, the bacteria that does this is anaerobic, and bio-balls and canister filters are highly oxygenated places. Anaerobic bacteria lives deep inside
live rock, and in the lower levels of a deep sandbed if you have one.
IMO, you should remove the bio-balls. Since they are currently a significant part of your biological filtration, you should remove them gradually. A handful every couple of days should be fine. A lot of people advocate replacing bio-balls with
live rock. I have a differing opinion here though. It really depends on the
wet/dry filter. If the area where you will be adding the
LR is above water, say, under a drip plate, where you find most bio-balls, then adding rubble will do pretty much the same thing the bio-balls did.
LR should be completely submerged for best denitirification.
Continuing to use the canister is completely up to you. If you do continue to use it, you will have to clean it often and very thoroughly to avoid it being colonized with nitrifying bacteria. It would solely be mechanical filtration to trap
detritus, run carbon or other media, etc.
Speaking of
detritus, that's another thing to look out for. the breakdown of
detritus generates
nitrates. You should be trying to siphon out as much
detritus as you can when you change the water, and not allowing it to build up in the
wet/dry either.
Beyond these things, there are additional steps you can take, such as utilizing a
DSB, either in the tank or remotely in a bucket, or setting up a sulfur denitrator. I'd see how it goes after dealing with the
wet/dry and the canister, and a couple of good sized waterchanges.
Please keep us up to date.