I assumed from your post that the Ludwigia had red leaves when you got it, but they have since become greener. The light they were previously under was probably different. Under your light there seems to be insufficient red in the white mix. This is common with many LED units, they are very "cool" which is higher blue but lower red. Plants will struggle under this.
We all know not to trust what any fish store tells you, unless they are knowledgeable. The iron myth has been around a long time, but it has never been proven. Back in the 1980's iron clay substrates (laterite) were the rage...but no one does these any more because they had no benefit over inert sand with balanced nutrients added via liquid/tab fertilizers. Kitty litter then became the rage, another ridiculous idea.
You have diffused CO2, so you have set up a higher level for the light/nutrient balance. I don't know what fertilizers you are using, but it is common to have algae if they are out of proportional balance. Iron can not only kill plants, it can easily cause problem algae. It is a micro-nutrient.
I had little success with red plants because of my moderate lighting. I had that for the sake of the fish, and the plants have to manage or out they go and other species come in. The red plant I did have success with was red tiger lotus. This worked because the floating leaves were up under the light, and the light was a mix of 5000K (warm, with higher red) and 6500K (slightly cooler). These leavs got killed when I added the iron, but recovered when I stopped.
Iron is a micro-nutrient. It is also a heavy metal, and conditioners detoxify these. If you use Prime, it is worse; the chemical in this that deals with heavy metals, according to Seachem, prohibits plants from using the metals (iron, copper, manganese, zinc). The API Tap Water Conditioner does not have this detriment. If you use Prime, you are not helping things.