Icelandic international Brynjar Gunnarsson snatched an eye-catching equaliser as United again failed to beat Ray Lewington's Watford side.
The Vicarage Road side had won on their five previous trips to Bramall Lane and pegged United back early in the game.
United escaped in the 18th minute, Bruce Dyer bursting through the middle before defenders Chris Morgan and Derek Geary moved in to stop him in his tracks 15 yards from goal.
The Blades were in trouble again minutes later - Neal Ardley and Dyer putting keeper Paddy Kenny under pressure with centre-back Phil Jagielka clearing before French teenager Hameur Bouazza saw his shot from a tight angle beat Kenny but fly a fraction wide of the far post.
Gunnarsson went close with a low drive before Alan Quinn snatched the lead for United in the 30th minute in spectacular fashion.
The former Sheffield Wednesday midfielder linked with Paul Shaw, beating Richard Lee with a stinging 25-yard drive, the ball crashing against the underside of the bar and over the line as the keeper tried to claw it away.
Alan Liddell almost added a second in the 47th minute cutting in from the right flank to drill in a right-foot shot from a tight angle, but with Lee beaten it crashed against the far post.
Shaw was foiled by Lee in the 65th minute, the keeper diving at the foot of the near post to clutch the ball before Watford were back on level terms in the 65th minute.
The hard-working Dyer flicked the ball to Gunnarsson who let the ball dip over his shoulder before beating Kenny with a volley from the edge of the area.
Jagielka went close with a header from Geary's cross before substitute Scott Fitzgerald almost snatched a winner three minutes from time as he beat the advancing Kenny with a dipping shot before Jagielka cleared off the line.