I would take out the malachite green and resume the epsom salt treatment. I suppose they must have contracted some other kind of internal infection and the pressure from the medication gave it enough of an advantage for it to continue to spread. I still think you did the right thing by treating the parasites first--after all, you can only treat what you can see and what you're able to diagnose. If you had left the velvet and gone on with an antibiotic, the velvet infestation would have absolutely taken off and possibly killed them, and if it did not kill them, the fish would be so weak it probably would not have been able to fight the bacteria.
At this point, I would do daily water changes in a small container and dose the epsom salt. The malachite green is just too harsh right now. :(
Phoebe is doing fine. I still see the velvet specks on her, and she's a bit less active, but eating fine and responsive.
As for jaffa, how long should I treat with epsom salt... I'd been treating them with salt for 9 days, so if I had continued, this would have been the last day. Should I bring her back up to 2 tsps or dose with less? When she fights off the pineconing, do I return back to the malachite green (she still has velvet as well). Also, I know I should have mentioned this as soon as I noticed it, but Jaffa hasn't eaten anything since yesterday.
Unfortunately it may just be Jaffa's time. Dropsy is very hard to bring even a fairly healthy fish back from--just do what you think is right, whether it means treating her with more epsom salt or letting her have a med break in some clean water. I'm not there, so it's hard for me to just give you the answer. Her not eating is a sign that she's deteriorated significantly, and it's very likely that she will pass away soon. If she seemed very close to death, I would probably let her go in some warm, clean water so that she could be as comfortable as possible--it is your decision, ultimately.