Thanks for the info steve and leslie, I'm glad it's reef safe!! I do have another worm for you both to identify, but I'm having a hard time getting a picture.
It's very similar to the one above, but it lives at the base of the live rock and the sand. It doesn't look like a bristleworm, it has longer feeler or tentacles and it scavanges for pellets and flakes on the sand (it doesn't leave it's home just what it can find around it's doorway). It likes to gather shells, zoanthids and rocks to extend it's entrance. When something disturbs it it retracts quickly into its cave/burrow. I'm guessing it might be the same as the one pictured above just another species? It doesn't seem interested in any of the hermits, snails, fish or corals (other then using them to make it's door). Any ideas? I'll keep trying for a picture.