First of all, I never use any DE with baby chicks. If they're in the brooder, they dont need it. Stall dry is not food grade DE as far as I know. I put food grade DE IN the feed and you cant do that with Stall Dry or any other type of DE. Medicated feed is not a problem unless you just got a bad batch of feed, maybe moldy or with bug damage. Bugs in feed do contaminate feed. I've returned bags of feed when I found bugs infesting it. Blood in poop could be cocci, could be worms, could be something else, hard to say.