It is my oppinion that the lighting, while moderate for a tank, is too
much
for him.

Very doubtful, these are the more light demanding anemones. mine is about
12" below a 250w MH and loves it. from what you describe of it inflating
and deflating there is something it doesnt like about the tank, they normaly
do not delfate. mine hasnt in well over a year. the only time it has moved
location is when my carpet (which stays up on the glass in the corner of the
tank) started to shade him and block out some of the lighting

here are a few pics of mine.

http://reefcentral.com/gallery/data/521/29872Nemo.jpg

http://reefcentral.com/gallery/data/512/29872sebae.JPG

he's now about 14" across when fully expanded.

kc