Sam Vokes took just 77 seconds to mark his first Norwich start with his first goal for the club but the home side were in front at the break after goals from Danny Graham and Don Cowie.
Norwich pressed after the break on a poor playing surface and levelled through substitute Simeon Jackson to keep up manager Paul Lambert's remarkable record.
Lambert has never tasted consecutive defeats during his 20 months in charge but the point - after a loss at Swansea at the weekend - means the Canaries fall behind Cardiff and into third.
Watford are now seven points off a play-off spot and Malky Mackay's side look unlikely to extend their season.
Mackay had six years as a player with Norwich but had barely stopped shaking hands with old friends in the dugout when the Canaries took a second-minute lead.
Watford skipper John Eustace lost possession in midfield and the ball fell kindly for Grant Holt to play over the top of a square back four for Vokes to run onto.
After taking the ball on his chest the forward looked to have run wide but managed to bobble the ball into the turf and over goalkeeper Scott Loach.
It was a nightmare start for the hosts but top scorer Graham almost stole in when Elliott Ward fluffed a header.
Holt then went close when Marc Tierney delivered a dangerous cross from the left before Graham did level matters in the 26th minute.
Again the goal stemmed from a mistake in midfield as Norwich's David Fox let a pass run under his foot.
Graham burst onto the loose ball, got another stroke of luck as his attempted pass to Marvin Sordell came back to him off Ward, and curled a shot under the dive of John Ruddy for his 27th of the season.
Graham was then instrumental as Watford took a 36th-minute lead.
Troy Deeney played the ball down the line and Graham flicked the ball around Zak Whitbread.
The American defender attempted to foul Graham but referee Anthony Taylor played a smart advantage to allow him to stride on and pick out Cowie in the penalty area. The winger took a touch before smashing an unstoppable shot in off the underside of the crossbar.
Graham lashed another powerful shot just wide as a thoroughly entertaining half came to a close.
Lambert introduced former Hornets Anthony McNamee and Henri Lansbury after the break while third substitute Jackson forced Loach into a smart save with a low header.
Graham then passed up a sitter when he failed to connect with Deeney's header from four yards out before Holt drove straight at Loach.
Holt was then inevitably involved as Jackson struck a 69th-minute equaliser.
Fox whipped in a free-kick from the left which Holt - who was being fouled - headed back for Jackson to finish from close range.
Lambert's side were playing with just two at the back as they piled on the pressure but Watford stood firm to take a deserved share of the spoils.