How to determine which setWatch callback function triggers the E.getErrorFlags() CALLBACK error

Ctrl-C while processing interval - removing it.

Did you Ctrl-C? If not, it's likely the IDE realising that the device is locked up (probably handling the analogWrite) and creating one for you.

If that's the case then you're executing code on upload, which would explain a lot of your issues. It's something that's come up a lot on questions that you have asked in the past, so might be the same again here.

My analogWrite function spits out ~4-16 pulses

Do you have an oscilloscope? I bet you'll find it's a lot more than that - analogWrite just keeps going.

Most likely even if you think you are stopping it using setTimeout, the sequence of pulses comes so fast that Espruino becomes occupied handling them and can't execute the setTimeout to turn them off.

Does the act of tripping the setWatch force a new linked area of RAM

No, it doesn't. It shouldn't use RAM (unless your code inside it allocated something)