Nothing was evil in the beginning, not even Melkor. He was good, but he turned to evil because he envied Eru and wanted to be like him - he couldn't, so he started to defy him and those who followed his wishes. He was originally the greatest of the Valar, and he attracted many to his service before and after falling to evil. Sauron was among those he corrupted after falling to evil.
Sauron was the most powerful of Melkor's followers, but he was not a Balrog. Balrogs were spirits of fire, which Sauron was not.
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