Question
This year I purchased Miracle Gro Potting Mix for the first time.  This soil was used for my front porch herb garden and my back deck heirloom tomatoes.  The tomatoes grew deformed, and yellow-ish dots appeared on the pots, trays, deck and everywhere.  There was a yellow/white fungus on top of the soil.  I would aerate often.  In addition, fungus gnats swarmed constantly.  I destroyed the tomatoes but I understand the fungus is still there and I'll need to "de-fungus" everything.

The herbs on the front porch exhibited a white/yellow fungus on top of the soil and grew a healthy crop of bright yellow mushrooms regardless of the amount of water.  The herbs still grew, but they look sick and I won't eat them.  Here's my question - twice, black swallowtails laid eggs on the Italian Flat-Leaf Parsley.  The parsley is planted for them as I raise and release butterflies.  Two complete broods of caterpillars died eating the parsley.  Will this fungus kill caterpillars?  I recognize this is probably an entomology AND soil question...but I'm afraid to use Miracle Gro Potting Mix again.  Never had this problem before.  Any advice?

Sorry this was so long!  Thanks for your patience.

Answer
Hi Debi, Mold/fungus/mushrooms are likely wherever there is decomposing organic matter and moisture.  Fungus gnats like the same conditions.  Miracle Gro potting soil gave them what they needed to survive. Mushrooms that come up in potting soil aren't normally harming the plant, but the conditions they survive in are conducive to root rot, stem rot and poor soil aeration which can harm or kill plants.
I believe the soil stayed too wet.  In addition, wet soil locks up nutrients.  You feed them, but they don't respond.
As far as the caterpillars dying, I think there is another cause.  If you can rule out pesticides, I suspect parasites.  Most insects "know" and stay away from toxic plants.
I would start fresh.  Dispose of all the soil.  Remove it from the property, don't dump it somewhere.  Clean all your pots and the deck/porch/area with a strong clorox solution.  
Use a potting soil without any "Moisture Control".  We want it to dry quicker.  You may need to water more often, but your plants will be healthier.  Feed container plants every 2-4 weeks.  Most of your fertilizer goes out the drain hole.  Even if you use a timed release fertilizer, supplement it with a water soluble.
Adult fungus gnats are mostly a nuisance.  They are easily controlled but since you are growing caterpillars, I'd live with them.  High concentrations of larvae can damage roots, but I seldom see populations that high.  Good luck.  Jim