I have the same problem with my chaetomorpha. I got a freezer bag full of it a few months ago, and it has dwindled down to one clump smaller than a baseball.
What kind of bioload do you have?
I think my problem is I don't have enough nutrients to sustain it. I just added my 3rd fish to the tank tonight, and the tank was fishless for 6 weeks while fighting a parasite. During that time, most of the nuisance algae went away and my pod population exploded. Hopefully as I start increasing the bioload I will be able to sustain some macros (my pods need a home).