Organic matter in the water would affect Coral because Coral need to be in clear, shallow tropical seas. Organic matter would affect water clarity and this in turn, would affect the symbiotic Zooxanthellae, an algae that provides the coral animals with most of their food. If they become stressed, they will expel their algae partners causing coral bleaching and ultimately, their death. Therefore, unpolluted water is best for a coral reef's general health.
Yes, it is. Coral does, of course, need to have organic matter in the water where it lives. But the organic matter has to be the right kind and in the right amounts. If there is too much organic matter (say from sewage effluent from human populations) the coral can have problems.