The Hornets agreed to a £25m fee excluding bonuses from Aston Villa for Sarr and were close to seeing him leave the club.
Watford were looking to secure the services of defender Hause and striker Archer on loan from the Lions as part of the deal for Sarr.
But, ultimately the Senegal international’s proposed move to Villa Park fell through owing to disagreements over the structure of the deal between Watford and Aston Villa.
However, the Championship side are still interested in signing the Lions duo before the window slams shut on 1st September.
Watford are unlikely to restart talks with Aston Villa for Sarr but they could sit at the negotiating table with them for Hause and Archer again.
While Hause is yet to be part of a matchday squad for the Lions this season in the Premier League, Archer has already clocked up minutes for them in one game, while remaining on the bench for the remaining two.
It remains to be seen whether Aston Villa will agree to loan the duo out with ten days remaining in the window.
