I recently decided that after 15 years of avoiding damsels (other than clowns) I was going to try a colony. I put 5 azure damsels in a 20 gallon reef with a feisty orange skunk clown. I knew it would be overloaded, and it would be temporary.
The 5 initially got along pretty well. I went about a month before one was pinned at the top corner with some fin damage. I know from cichlids that this is a bad spot to be in. It's the most-submissive thing a territorial fish can do in your aquarium. They just want to get out of the aggressor's territory. I removed it and put it in a 10 gallon.
Another 2 months went by and another was pinned at the top. The remaining 3 seemed pretty happy together though. I moved the pinned one and the one from my 10 gallon into a newer 8 gallon cube. They have been fine there for months, with some light quarreling but no damage or breeding.
The 3 in the 20 gallon are a trio of 2 females and a male. I don't know what schedule they breed on, but there are always 1-2 patches of eggs on the glass. My next step is going to be trying to collect fry, and if that's successful I'll have to figure out how to raise them!
If yours aren't getting along, then what else is in the tank with them? With cichlids you can often throw in a "common enemy" or target for them to bond over. Maybe a clown could help them pair-up, or a 3rd damsel (even if the 3rd wheel has to go back to the store)? Usually you won't see 2 pinned at the top at the same time. Not sure if mirrors could work with damsels either, but it could be worth a try. It sometimes works with other aggressive fishes.
In college I had 2 salvini cichlids sectioned-off in a 55 gallon (nice F1 female from Don Conkel). The male wanted to shred the female. I tossed my 8" jack dempsey in when I removed the divider, and the two salvinis both fought the intruder side-by-side. After 5-10 minutes I removed the dempsey and they remained a happy pair. I spent the next 2 years slowly getting rid of 150 salvinis....lol. Damsels would likely need a longer-term addition. New World cichlids are dumber to put it plainly, and they tend to grapple "here and now" instead of slowly chipping away at something with hit-and-run attacks.
