To answer your question the cloudy is probably bacteria bloom caused by high nitrite (going by what I've learnt from the experts on here). This is not a good sign - but theres loads of info on here to help you fix it!
So - how do you fix this? First we need some more information.
1) How big is your tank?
2) What fish do you have, and how many of them?
3) Do you have test kits for ammonia/nitrite/nitrate? If so - what are your current test results.
As for cycling you already have fish so I'll cover the 'with fish' method. The whole idea is based on the 'nitrogen cycle'. Fish create ammonia as a waste product. Ammonia is a poison (for fish) so you need to turn it into something else. Helpful bacteria do this - they turn it into Nitrite. Unfotunately this is also poisionous so differrent bacteria turn it into nitrate which is much less poisinous - you then do water changes to keep the nitrate at a reasonable level. The problem is when you start you tank you have no bacteria and so for a while the ammonia/nitite just builds up and up - causing problems like the bloom you have and very sick fish. The bacteria will occur 'naturally' but they need a while to develop so the idea is you add a couple of fish - lots of water changes and slowly you build up enough good bacteria to support a couple more fish - and so on until you have a full tank. While this is happennning you monitor everything with a test kit so if it starts to go wrong you can up the water changes to keep your tank 'safe' for fish (up to 50% water change a day if necessary)
See
http/fish.orbust.net/cycling.html for _way_ more info on cycling and how to rescue a tank that already has cycling issues.
Good Luck!
aj xx