Watcher In The Water

[The Barrow-Wight]

If you remember from the book in the Chamber of Mazarbul, the Watcher was also responsible for the death of some of Balin's dwarves. It prevented them from leaving and thus was responsible, in a way, for their ultimate demise. Still, I doubt that the creature 'served' Sauron purposely, but it certainly served his purposes. I forget the exact text, but the hints of 'creatures' lying beneath the earth could definitely mean more than just Balrogs. The idea that the Watcher was a monster is most likely the closest to the truth.