I would remove anything from his tank that mites could hide in. I wouldn't use the bark - get some tile from Home Depot or Lowes for substrate - the mites won't be able to hide in that, and it will be much easier to keep clean. I'd also clean out the inside of the tank - use a diluted bleach mixture, hot water and bleach. When yo uput decorations in the tank, I would keep away from anything that the mites could hide in, such as bark or logs. You could try giving your frillie a long
bath, try to drown the mites.
Everest (aka Evie - frilled dragon) and Merlin (bearded dragon) both had mites earlier this summer, I only found about 2 on each of them. I think I caught it very early, as I immediately bleached their tanks, gave them baths, continued cleaning and checking them over for about a week. But I didn't see any other mites, so I was very lucky. I do know with frillies, that mites LOVE to hide under their frill. So as you treat your frillie, you'll want to check under the frill to make sure there aren't mites hiding there - just gently slide your fingers under the frill and slowly expand it.
I don't know if you've looked online about mites, but this is a post from the frillie forum at repticzone about someone who was in a similar situation - bought a frillie from the pet store, only to find the frillie was infested with mites.
http://www.repticzone.com/forums/FrilledDragons/messages/1593595.html