The Nancy Nichols who married John Watts was actually a daughter of Edmund Nichols.
As proof I submit --
Mr. Thomas Allen Clerk of Mercer County Court of Ky Sir Your hereby Requested & authorized to issue a License to selebrate the rites of Matrimony Between John Watts & Nancy Nichols my daughter as witness My Hand and (?) This 20th day of Nov. 1844 Edmund Nichols seal
Witnesses Pitt H. Morse Joshua R. Nichols
Edmund Nichols was born about 1783 in Virginia. From his age I would guess that he's a brother to your Nathaniel Nichols.