The Watcher in the Water
 

What exactly was the watcher in the water, was it linked to the Balrog, where did it come from?

The Watcher's nature is unknown. It was likely one of those "nameless" things that exist below the roots of mountains that Gandalf mentions after his return to Middle Earth. I have heard it identified, without any support from Tolkien or his works, as a Kraken or a squid.

This issue came up a little while ago and I will just repeat what I said in that thread:

The Watcher in the water is what is generally referred to as a kraken, a giant aquatious creature. Mostly they are found in sea´s and oceans. However this one is in the artificial lake before the Westgate. How did it get there? If I remember rightly Gandalf mentioned to Aragorn, Legolas and Gimli in Fangorn something about nameless things gnawing the earth under the deepest Deeps of the dwarves, when telling them about his fight with the Balrog. Also it is said that they plunged into water at the bottom of the abyss. That would be favourable for the kraken-hypothesis. The damming of the Gate-stream caused the lake to form and probably made it possible for the creature to leave its underground environment.
Who dammed the river? I do not know, but one might speculate the Balrog who knew the ancient underways (Too well he knew them -Gandalf) may also have known about the existence of other creatures under Moria. Maybe he made the orcs/trolls make the lake so as to provide a guardian on the west-border of his realm. Of course this is pure speculation....

greetings, gildor

I read in a book i just got today that it was a kraken maybe, created by Melkor. It really would be nice to hear more about the nameless and shapeless things, but i dont think there is more.

like shelobs back ground im gessin unknowen!