Spoke with a neighbor, he had a similar problem with the sediment in the tap water, and it didn't resolve itself until recently. (And to be honest, it might not have completely been resolved.)
On the issue of the filter, I spoke with Marineland, and they said to ship it to them, and include a letter with what I would like for them to do to resolve it. I am thinking of buying a 200 separately and use one of the cycled biowheels on the 200. Then I will float the other biowheel in the back of the filter vertically, so that it still gets a good amount of flow and rotate them every 12 hours. Then, I will send the 350 housing back, with the new biowheel and one cartridge, and ask them to return the housing for a 200, without the filter media along with a refund for the difference in price between the the 350 and the 200 (or just ship it back for free, which would be just as good to me at this point). Then when the new 200 arrives, I can put the floated biowheel into the new 200 on the opposite side of the tank and bingo I'm in business. What does everyone think?