Considering the shock of discovering a Balrog in Moria, I don't think that was ever considered.

Some other sorceror of human (or maybe even Elvish, but I find that almost impossible) origin might have been a possibility.

I think they must have assumed Nazgul from the beginning and only thought "Sauron" later on down the road.

Was everyone surprised at the nature of Durin's Bane? What did Galadriel know?

But what of Elrond? He knew that Sauron more likely was not destroyed. He was able to glimpse the future. Could he have not considered, even if unlikely, that the Necromancer was possibly his old friend from Mordor?

And why did Tolkien use the word, 'necromancer?' I understand (maybe) why he didn't use wizard or witch, but why the title that speaks of communicating with the dead, that more than Sorcerer?

Everyone was surprised, definitely, while Galadriel of course remains a little mysterious. While Celeborn was immediately shouting "Oh no! We knew there was something, but I never imagined...! Had we known that...!", Galadriel, if I remember correctly, was silent - and I can imagine her thinking "Of course, I know... but I did not tell them, after all, as long as it was not dangerous for us, why tell them?"

At some point before Gandalf came to Dol Guldur for the second time and finally confirmed the truth, he and Elrond at least presumed that. Maybe even others did, but the text tells us definitely that the two of them did (depends on how you want to interpretate "us" here, but you see they are here in contrary to "many"):

So yes, Elrond probably knew and thought about it, as well as Gandalf, but still it took them long to take some action. Well, the text implies that going to Dol Guldur was not much of a funny walk, so maybe they were reluctant to go even to spy there, if the majority of the Council did not want to give their hands to it (considering it probably just "some little Nazgul and it's not worth it risking your life by going to confirm it").


I believe in some HoME there was something Tolkien wrote about it. The point was that Sauron was able to manipulate with the spirits of the dead, trapping the spirits of dead dark Elves unwilling to go to Valinor and similar things - I don't know personally, but it has been discussed here not that long ago, if you look around for similar topics, someone mentioned that (I believe Elmo it was, about a year ago, more or less).

The term "Necromancer" for the Sorcerer of Dol Guldur was devised in 1930-ies, when Tolkien was writing "the Hobbit" - long before Tolkien invented Sauron or the One Ring.
At the time, and almost all through Tolkien's work on the LOTR, the wizards were not what they have become later - not Maiar, but mortal Men "of a noble profession", wielding sorcery and having a very long life.

Some remnants of these earlier ideas are still visible in LOTR. In the “Shadow of the Past”, Gandalf expresses a "professional” interest in the Ring: " I was professionally interested in your ring, you may say; and I still am.”

At first the Wizards were supposed to be rather numerous and common - almost like special "folk".
See this part of the LOTR prologue:
Compare it with the quote from the Hobbit:
The wizards were supposed to come from Numenor. See this quote from the LOTR ( also present in early drafts):
Now in “the Hobbit”, how to single out a “bad” one among numerous human sorcerers? - Referring to him as “Necromancer” implied that he used Black Magic, meddled with the spirits of the Dead- a bad thing that the other wizards didn’t do. I don’t think that in the 1930-ies it went any deeper than that.