Agree with the preceding- and would add that while Durin's Bane was some sort of subterranean nasty, there was no reason for the Wise to leap to the conclusion it was a Balrog. Moria is a place where "nameless things" gnaw the earth. Tolkien was careful to suggest that there was far more wonder and terror in Middle-earth than he put in his books, and it can't all be neatly pigonhoiled.
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The entire plot of The Lord of the Rings could be said to turn on what Sauron didn’t know, and when he didn’t know it.
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