As a post-doc, can work on applications of existing methods harm my career prospects?
As a general rule: publications tend to be the measure of whether something is novel. So, if you are publishing, I'd say you indeed are helping your academic career. If you aren't publishing: that is a major complaint you can bring up with your PI. Here you can use the outsize importance of publications in academia to your advantage. You can debate all day long whether your work is novel enough with your PI, but no one can justify leaving you without publications.

Also, it is important whether these applications are helping you grow as a researcher. Are these applications trivial, mindless work, or do you learn things while working on them? Are you getting faster/better at implementing them? Are you ever surprised at results, or can you predict what the results are going to be before the experiments are done?
Note that breakthroughs in science often rely on a strong grasp of the fundamentals and the context in which the work is done. Having strong experience in applying those algorithms could be essential in later designing them yourself.