There are several likely problems from what I read in your question. My questions back would be:
1) Was the FC only 4:1 diluted?
2) How long did you etch for?
3) Was the blade vertical in the tank?
1) If etching to remove metal from damascus, use 4:1 or 5:1 FC. If etching for a hamon, use 10:1 to 15:1 FC. You don't want to remove metal in developing a hamon, you want to change the color and barely etch it.
2) In a long etch, or a concentrated etch, little bubbles form and "walk" up the blade. These clean a path as they go that etches deeper than the areas that get the black crud.
3) In a regular damascus etch, it is good to move the blade around occasionally to break up the bubbles. In doing a hamon etch, it is good to remove the blade and rub it down with a paper towel or cloth pad ( makeup removal pads or gun cleaning pads work great). Often the entire etch is done while holding the blade in rubber gloved hands and rubbing the etchant on the hamon with a pad.
A variety of etchants may work well on a hamon, as well. They all etch a little different. Try dilute FC ( start at 15:1 and try up to 30:1 for the most wispy hamon). White vinegar, lemon juice, and one of the all time favorites 100:1 nitric acid. The dilute nitric acid can make very subtle things show up.
After the hamon is etched, how you clean up the blade determines how the hamon shows. Different "polishes" give different effects. Simichrome and Flitz are two popular compounds to clean the area above the hamon ( shinogi-ji). Use a tiny dot and work it with the cotton pad and a fingertip. Fine grinding compound or loose SC grit and olive oil are used on the area below the hamon ( ha-ji). Tin oxide, several types of iron oxide, and chromium oxide are the most common other polishes. Using these in the right combination can make a good hamon into a stunning blade.
A good trick for not messing up the hamon or the other areas is to use nail polish.
After hand sanding the blade to at least 2000 grit and working on the hamon with etchants to get it to the max, lightly work the hamon with a very fine abrasive powder. You don't want to polish it at all, just get an even "white look" over the entire hamon area.
Once the hamon is developed, wash the blade well and paint a line of nail polish over the hamon right up to the ha-ji. Polish the metal with whatever compound you are using in that area ( 400-1000 grit SC in a drop of oil) and when it is done, clean the blade well. You want a bright but not shiny surface. Remove the nail polish with acetone and then re-paint it with the line defining the shinogi-ji. Polish that surface with the desired compound ( usually Simichrome), clean the blade, and remove the nail polish. This is how you get a dark and shiny upper surface and a bright and matte lower surface ... divided by a wispy white hamon.