Sounds like something is wrong. New chaeto growth should look like old chaeto growth.
In my old tank, I had a problem with my chaeto not getting enough flow through, due to a poor baffle design. My chaeto started to turn brown and "melt". I dumped the chaeto, added a baffle, put in new chaeto, and it worked fine. IME, once chaeto gets messed up, it doesn't recover really well.