Tank looks like a fairly new setup but the issue I see mainly is the fish itself which is very skinny. Often LFS sells these guys as algae eaters when they technically are nor and they face starvation.
Its a misconception that these are algae eaters. The trickiest part about keeping a blenny is making sure it gets enough to eat. Problem is Improper diet. The trickiest part about keeping a blenny is making sure it gets enough to eat. You can tell this visually by looking at the abdomen, which should be a golf ball shape. A blenny with a pinched belly isn’t finding enough food.
Although a blenny needs algae to survive, its a misconception is that it can survive on algae alone. Since blennies frequent shallow water, they find their home in coral reefs. They circle areas of coral branches and sponge scraping their way along the bottom. Their feeding habit is to pound and gnaw the coral, and ingest detritus, or waste material from the coral. This includes coral skeleton, sand, gravel, and fish eggs and tiny crustaceans.
Since a blenny in the wild does not eat only algae, their captive diet must be supplemented. If a blenny is not getting enough calcium carbonate in its diet, it will rapidly deteriorate. Offer an occasional helping of algae-based wafers or pellets.
If the fish is eating, this will be good as nutrition will need to be a key to Buidling this fish back up to health. While I see what may be bacterial may also stem from starvation. Offer mysis shrimp, plankton, spirulina brine shrimp, chopped krill an LRS fish frenzy.