What is this white stuff?

Question
I have a black moor gold fish that had something wrong with it around its eye when I woke up this morning.  Last night everything looked normal but this morning it was all white around one eye and it is starting on the other.  It almost looks like the skin/scales were peeled off.  He is in a tank with a ryukin goldfish a couple blackskirt tetras and a couple small angel fish.  They have been together for almost a year now without any conflicts.  No noticable difference in behavior.  I have been observing him today and have not noticed him scraping on any rocks or gravel.  It is all white around his eye but not affecting his eye, just the surrounding tissue.  It has not moved onto his body yet.  Should I remove him from the tank and hope it clears up and heals or do I need to treat the whole tank?  Also over the past week I have been having a problem with massive algae growth.  I have been cleaning it off regularly and changing the filter.  The light is on for 8 hours a day, off at night.  I am not sure if this is related at all but the timing coincides with this so I thought it would be worth mentioning.  Any input to my problem would be helpful.  He is my favorite fish in the group and I would hate for anything to happen to him.  I have a picture here you can view to help with your diagnosis.  Thanks.

http://i109.photobucket.com/albums/n41/J10Brook/DCP03182.jpg

James

Answer
Hi James,
Your fish seems to have popeye.This condition is caused by a wide range of factors including, bacterial infections, parasite infrestations, poor water quality, and internal metabolic system disorders. It is quite rare for this to be passed on to another fish or for the infected fish to die. Treatment with a broad spectrum antibotic, injection is the prefered method if the problem is of a bacterial nature. There is not much other then that treatment that offers much hope for improvement. I suggest the fish be isolated and give extra clean water and varied diet. Should the fish show no improvement appear and the fish shows any sign of distress, destroy them painlessly and consider it a kindness.

Regards,
Chloe.