I'm having a similar problem and I just found this:
There is white stuff growing on my Grow Sponges (or plants).
Sometimes people notice a white fuzz developing on the surface of their Grow Sponges, especially when the plants are small. This may be a fungus that is decomposing any seeds left behind in the Grow Sponge that did not sprout.
If your plants are still small, you can usually remove the dead seed by following this procedure:
Remove the label (if you can) from the top of the pod by making a cut from the center to the edge of the label and gently peeling it off, being extremely careful not to cut or damage any little sprout stems. Save the label, as you can put it back in place like a collar later.
Gently open the Grow Sponge and see if you can find any unsprouted seeds, and if you do, gently remove them with tweezers. Once the dead seed is removed, the fungus will die off.
If you have a fungus that is starting to grow up the stem of a little plant, do the procedure above first as it is most likely the source of the problem, but in addition, dip a cotton swab in a bottle of hydrogen peroxide (available at any drug store or supermarket), and very gently daub the stem of the affected plant with it. This should kill any fungus.