Morgoth's plan for Angwë was not simply to transform him into a balrog and let him loose upon his enemies. He had to be fully prepared for the work he had planned for him, and this took time. In the process of transforming him, Morgoth had actually joined with him in spirit - he had effectively "married" him. The result was that he could connect on a spiritual level with his master, and fully belong to him and to no other. Indeed, there was so much of Morgoth in Angwë now that one could even argue that this new being was more of a child of the twain than a person who had merely been corrupted by him. Of course, there was a price for the Tyrant to pay - every time he did this thing, he diminished himself and thus became weaker. The stolen Silmarils, he had discovered, imparted no healing or any good thing to him, and did not aid him in his quest to rule over flesh and spirit. However, they did exude a certain virtue where living things grew, so he did receive some benefit from them.
Morgoth had many balrogs. He needed them precisely because he had weakened himself in their transformation. By giving of himself, he had gained control over them and was one in mind with them, and he could use these extensions of himself to gain more power and control for himself. For this reason, he never turned down an opportunity to make another one, whatever the cost to himself.
While Angwë now looked like a balrog and had a portion of his master's soul within him, he still retained enough of himself and his old ideas to be able to will and act on his own behalf. Morgoth knew this, and had a plan for dealing with it. Contrary to the ideas and opinions of many, he did not seek at any point to break the will of his balrog, but to use it to his own ends. Therefore, he called Angwë to follow him and do certain deeds, ostensibly to prove his loyalty to him, but actually to compound and confirm the idea that had been planted in Angwë's mind the day Adzarek son of Halin died that he could never go back to Aulë and beg pardon for what he had done. Therefore, Angwë would believe that his only hope of security lay behind the towering walls of Angband.
Angwë had not yet truly known the piercing, soul-rending horror of real fear, and he would not truly belong to Morgoth until he did. For Morgoth alone of all the Ainur knew fear, and the horror of being so securely confined he could do nothing he wanted, and relied on others for his needs to be met. Angwë had been afraid; for his mountain and the damage it was suffering at the hands of the Dwarves, and of the consequences of the death of Adzarek; but he had never experienced fear the way that Morgoth had. Angwë had to be made to feel that fear to complete his bond with Morgoth.
Accordingly, Morgoth took Angwë deeper into Angband's pits than he had ever been before. "Today," he announced, "I will show thee a great secret: thou shalt see the creation of the Orcs, and thou shalt be a helpmate unto me in the making thereof."
Angwë dutifully followed his master down the steps to the pits, and as he did so, the fire he was wreathed with died down, until he was naught but a shadow of darkness, dragging darkness with him wherever he went. There was now no sword or whip - they had died down with the fire. He felt powerful, and full of rage and bile. Angwë was aware of his new connection to Morgoth, and while part of him rebelled, appalled at the notion that he could be so completely owned by another being, overall he understood that this was the price he had to pay if he was ever going to stand a chance of getting that which he craved: the return of ownership of Celebdil, the mountain he had made, to himself. Of course, there was no guarantee he would achieve that, but for the moment, the promise was enough.
They arrived in a large chamber. In the chamber, a number of Elves were chained to the wall. "Master, I crave leave to ask thee a question," Angwë said, his curiosity piqued.
"Thou mayest," Morgoth replied.
"For how long have these people been chained here?" Angwë asked him. Having Morgoth as a part of him meant that any desire or thought that he might have entertained along the lines of attempting to free these unfortunates was crushed before it took wing, though in a hidden corner of his mind, he felt some pity for them.
"For an hundred years," Morgoth replied, "They did strive to find a means of entering my stronghold, but mine Orcs took them alive as I bade them, and brought them unto me. Behold how I have starved them nigh unto death, but kept them alive by mine arts, so that they crave sustenance: any that I would provide them with."
So speaking, he took some foul flesh from a large wooden platter brought in by Sauron, and put it into a cauldron with a little salt and put it on the fire that perpetually burned in that place. As the stench of the cooking flesh began to permeate the room, he brought the cauldron within arm's length of the Elves. They were skeletal, desperately hungry and reached out as far as they could stretch for the cauldron. As they did so, Sauron unchained them, and they fell upon the flesh like animals. Morgoth turned to Angwë. "Behold their great hunger," he gloated, "so great is it that they knowingly feed on the flesh of their friends that besiege us even now outside the gates. I will continue to build on this foundation until they hold that they can never return to their own folk. On that day, they will begin to be mine."
"Master," Angwë started, but Morgoth cut him off.
"I have fed them thus these long years, and have chained them in strange shapes until they have gone mad. I have kept from them a view of the stars they love, and woven a net of despair in their hearts. I have poisoned them and given them the cure as hope faded for them that they might survive. I have locked them up, a score at a time in a cell built to hold but two, and thrown them small scraps to cause them to fight. By these means I have made them into creatures of mine own. More shalt thou make for me, using spies caught trying to spy upon us or runaways taken by those loyal to me. Sauron thy brother will help thee."
Sauron grinned wolfishly, obviously approving of the transformation Angwë had undergone. “It is good to be in league with you again, brother,” he said.