Lanny, It's disturbing to hear news like this!
I honestly think I would have reacted the exact way you did in this transaction. I don't think you could have stopped this from happening. I agree with Rocket, and am not convinced the buyer new he had fake $100 bills.
On the upside, you could have sold him 3 watches and been out a grand. I think we all learn from these situations, and I feel very bad about your loss. Not just the financial end!
-MM