Yes, that is algae. The algae itself is harmless but it is indicative of too much soil moisture. And yes, you should be allowing the soil to dry out between waterings. Let it dry out until it feels just barely damp before watering again. It should not stay wet. Wet soil leads to root rot. Only thing you need to do with that sickly plant is allow the soil to dry out and hope it recovers. Oh, and if that container doesn't have drainage holes then you need to add some.

Rodney

It has holes but I think it has a plastic tray too and that may be the problem. I will drill some more holes. Thanks Rodney!

To wet - that said might be hard to stop. I have shady places I never water that get it. It is humid here in Ohio though.