I've just started on the Silmarillion, and it certainly is the case that Morgoth was unable to create anything of his own - just twist beings that were already in existence (elves : orcs, ents : trolls).
Balrogs were Maiar who sided with Morgoth. So, he did not create them.
I've seen it suggested elsewhere ('though I can't find the thread now) that Dragons were formed by Morgoth from Eagles, but I don't hold with that. I suspect that they came into being along with the other beasts of ME.
That being the case, then only orcs and trolls are Morgoth's "creations" (unless anyone can think of any others, maybe Wargs from Wolves), in which case trolls would have to be his greatest "creation", being meaner than orcs.
[ January 17, 2003: Message edited by: The Saucepan Man ]
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