you can have an eel in your reef tank if you want. But there are limited kinds to have. I have had success in the past with whited-eyed morays, they get about 2 feet long and don't both fish much larger than silversides. I had it in with a school of damsels and it never ate them. I currently have a white-eyed moray eel with a Niger triggerfish, Blue Ring angelfish, flame angelfish, ornate wrasse, one-spot foxface and maroon clown in a tank with lps, BTA, leathers, and a bunch of cleaner shrimp. These eels are good eaters and do liked to be cleaned by shrimp (add them first).
The other eel worth putting in a reef tank is a zebra moray. I had one of them as well, but it was 4 ft long and never came out. he is a slow eater and that is why it will not eat your other fish. they need to be fed by feeder stick.
The main reason people don't add them to the reef tank is 1) they usually snack on fish you want to keep and 2) once they are in, they are a pain in the butt to get out.
-Dr Marco :sfish::sfish: