Really tough decision. One could argue that you have the experience of the journey and the thought of your friend. One could also say, he wanted you to have the watch to show his gratitude for all your efforts. You friend could have saw the gift as a connection between you and him.
I would keep it for the fact that through the process of effort and time you will get additional funds to feed the addiction.
You can never get some thing again from someone you have lost no matter the amount of time or effort you exhaust.
You may just one day realize you want the watch back if you sold it.
At the end of the day, the decision is really yours, regardless of what others think, right or wrong, it is your decision and no one should tell you made the wrong one.