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When your octopus (or any other critters in the water) go to the bathroom, they release loads of ammonia into the water. Ammonia is poisonous to them. Luckily, there is a type of algae that eats ammonia and turns produces a substance called nitrite. Nitrite is dangerous too, but we're rescued by another algae that eats the nitrites and produces nitrates, which aren't very harmful.
If you have a big tank of saltwater and you put an octopus in, it will die pretty quickly because of its own waste. If you put a bunch of live rock and a couple little fish in, these helpful algaes will start to grow. This process takes a few months and is known as the nitrogen cycle.
There are a lot of good resources on the internet about the nitrogen cycle. Try saltaquarium.about.com or do a google search. You might also want to pick up some books about keeping a saltwater aquarium.
I, too, am learning that the octopus is not an instant-gratification pet!