I think it's just because of you're waterfall over the wood combined with the cocopeat.
Shouldn't be a problem.
The water in all of my tanks have a brown/reddish coloration,
nothing wrong with that.

You might use filtration over activated carbon if the color bothers you.
But you will need a filter to do so.

Was the foam completely fixed before you put water in by the way?
Otherwise i have no idea why the fishes would die on you.

I think it's strange that you're water test said that the water hardness is to high,
since nothing you used should cause this, the materials have the property to lower the hardness.