Etienne Capoue, Juan Zuniga and Troy Deeney, with a late penalty, gave the Hornets a 3-1 Premier League win over the visitors, whose reply came from 18-year-old striker Marcus Rashford.
It inflicted a third straight defeat on United, after losses to Manchester City and Feyenoord.
And it left former United midfielder Scholes accusing the current side of being flimsy in key areas on the pitch, and not up to scratch even when it came to the basics.
Scholes said: "The quality on the ball was as poor as you've seen from a Man United team, and that's just the way it is at the minute
You're not sure what you're going to get.
"Rashford is probably the only shining light really and he didn't have his best game today, but he looked a threat
I just think in possession Man United were really, really poor.
"Individually it wasn't good enough
In possession it wasn't good enough
So sloppy, giving the ball away all the time."
Scholes, who retired for a second time in 2013, spent his entire club career at United, much of it in the centre of midfield, which is where he now considers Mourinho's side to be at their weakest.
Making a case for the inclusion of his former United team-mate Michael Carrick, who was an unused substitute at Watford, Scholes at the same time suggested Marouane Fellaini was too limited to sit alongside Paul Pogba.
"I thought Fellaini was all right, he does a job which stops the other team
But I think if you're Manchester United you need more than that," Scholes told BT Sport.
"I think you need someone who can stop the play - but he needs to be capable of controlling the game of football as well, playing forward, passing forward.
"As well as he (Fellaini) has done in the first three or four games, I just can't understand why Michael Carrick's here
It looked last year like he was leaving, he's not been involved a minute of the season, so what he's done I don't know.
"Obviously (Bastian) Schweinsteiger - he (Mourinho) is not keen on him
They need to get a playmaker in there
You're coming to Watford, you're not going to Arsenal."
Scholes saw United repeatedly picked open by Watford, and added: "I expected them to be a lot tighter defensively, especially with bringing Chris Smalling in, but they were all over the place and every time a ball came into the box you felt Watford were going to score.
"Something's not right there
The cohesion of the team isn't there
He (Mourinho) needs to find the right mix of players."
Source : PA
Source: PA