First of all I have to apolgize that I don't have the English names for the tentacle enemies yet, would be nice if someone could provide me with them.
I've played The Watcher in the Water multiple times, and one of the most useful cards fot me in this scenario is Daugher of the Nimrodel*. She offers an answer to all the forced effect of the three types of tentacles:
1) One tentacle (TWitW 75) will attack you undefended if you draw the wrong card (=tentacle enemy or vard with a shadow effect). Since it has an attack value if four your heroes might die a quick dead. Here DotN can be used as usual, being able to heal the entire damage if you use her at the end of the current and at the beginning of the next round.
2) Another tentacle (TWitW 74) reflect the damage on one character of teh atatcking player. That ususally means either sacrificing an ally or hurting one of your heroes. IMO this is the toughest of the tentacles. But again, DotN can heal your heroes from the damage (usually 3 points).
3) So far, so good. But this is DotN as we already know her. But then there is tentacle no 3 (TWitW 73) which as an attachment sets the attack and defense value of a character to zero. The Miner of the Iron Hill won't help you, as it's no condition, the only ones who are able to discard this attachment are the Black Uruks. The bad thing about the attachment is that the player has to attach it to an attacking character. That's why this tentacle should always be attacked by two characters to make sure it is destroyed. And here is where DotN shines: Make her one of the attackers and let her take the attachment, if neccessary. Of course a player could use every character with low stats on attack or defense this way.
4) In case The Watcher in the Water attacks a player can always sacrifice her as a defender in case he needs everyone else to kill the monster.
If you have trouble to defeat this scenario, try Boromir and Loragorn - the fit well, especially Boromir is a powerhouse.
* other cards are Shadow of the Past, Henamarth, Rumour from the Earth and every card with a card drawing effectif you're going for Durin's Door instead of fighting the Watcher.