Plants prefer to uptake ammonia over nitrate. Likely they're chewing up whatever ammonia is being produced and haven't gotten into the nitrates much. Initially, ammonia was probably being produced faster than uptake, and now the plants have caught up, or ammonia production rate slowed. It's also completely possible that your test kit is way off.
It's my understanding that the metabolic pathway for ammonia uptake will be more or less the sole N pathway being used until ammonia is not readily available, at which time the enzymes for assimilating nitrate will be produced or activated. Nitrate is converted into ammonia by the metabolism of the plant in order to be used to synthesize proteins. It makes sense for the plant to use less energy and skip the conversion if the intermediate product is available in the environment.
That brown algae is likely diatoms and is very common in new aquariums. It generally goes away on it's own.