Often, the only symptom you will see with velvet is rapid breathing and then death. The "tiny white spots" or 'dust" that you hear about is freshwater velvet, a different organism. Or, people confuse end stage ich with velvet. Rapid breathing and possibly glassy eyes are the only primary symptom with velvet.
Sorry about the clown, you're right, it won't make it.
Going forward, I would avoid "observational quarantine" unless you hold the fish for 45+ days, and even then, it is simply not as effective as a proactive quarantine.
Jay