Utilizing Ge marker layer experiments combined with atomic number contrast (Z-contrast) imaging, we have studied the evolving surface morphology of SixGe1-x alloys during growth by molecular beam epitaxy. The marker layers map out the instability transition between planar two-dimensional (2D) growth and three-dimensional (3D) growth. The transition occurs via the gradual formation of a surface ripple as anticipated from instability theory. However, these undulations rapidly develop into crack-like surface instabilities which we simulate and explain by the mechanism of stress-driven surface diffusion. Finally, we model the large stresses associated with these features within a fracture mechanics formalism. This analysis demonstrates that crack-like instabilities provide ideal candidate sites for the nucleation of misfit dislocations