This root and ones like it were used for Elvish words for “under” and “(going) down” for much of Tolkien’s life. Probably the first appearance of this root was ᴱ√NUHU “bow, bend down; stoop, sink” from the Qenya Lexicon of the 1910s with variant ᴱ√NŪ appearing in parenthesis, though marked by Tolkien with a “?” (QL/68). The most notable derivative of this root was ᴱQ. núme “west”, and Q. núme(n) remained the Quenya word for “west” for the remainder of Tolkien’s life. Elsewhere in the Qenya Lexicon Tolkien compared the root ᴱ√Ū “under” to the short form of this root ᴱ√NŪ, but went on to note that “Ū- = not” (QL/96), perhaps the inspiration for him later transferring the sense “under” to √NŪ. As for the contemporaneous Gnomish Lexicon, the root ᴱ√NŪ/NUHU had derivatives like G. nûmin “the west” and G. nunthi “downward” (GL/61). Of ᴱ√Ū¹ “under” there is no sign, though there are plenty Gnomish derivatives of ᴱ√Ū “not” (GL/73).
Indeed, by the Markiya poem of the late 1920s, Tolkien was using ᴱQ. nu for “under” (MC/214), though in the drafts he initially used no (PE16/62, 72). In The Etymologies of the 1930s he had the unglossed invertible root ᴹ√NU/UNU with derivatives like ᴹQ. nu/N. no “under” (Ety/NU). The only notable derivative of its inverted form was ᴹQ. undu “down, under, beneath” (Ety/UNU), which reemerged in the Q. Namárië poem in Q. undulav- “swallow, (lit.) down-licked” (LotR/377; PE17/72; RGEO/58).
In The Etymologies Tolkien also gave a new strengthened form of this root ᴹ√NDŪ “go down, sink, set (of Sun, etc.)”, now serving as the basis for words for “west” like ᴹQ. númen, N. dûn or N. annûn, though strictly speaking the latter was the cognate of ᴹQ. andúne “sunset” (Ety/NDŪ), a Quenya word that was also frequently used for “The West”. All these Quenya and Noldorin words reappeared in Tolkien’s later writings, with the caveat that in Sindarin Tolkien used S. nu for “under” as in S. Taur-nu-Fuin “Forest under Nightshade” (S/155). The root √NU, its inversion √UNU and its strengthened form √NDU appeared regularly in Tolkien’s later writing, consistently with senses like “under, (go) down, sink”.
Tolkien used words like Q. nauco and S. naug for “dwarf” throughout his life, but the underlying root evolved over time. No root for these words appeared in the Qenya Lexicon of the 1910s, but based on words like G. naud “bowed, bent”, G. naug “dwarf”, and G. naur “ill-tempered, sour, grumbling”, it was probably something like ✱ᴱ√NAWA (GL/59), Tolkien’s portrayal of Dwarves was not very positive in his earliest writings. In The Etymologies he gave the root as unglossed ᴹ√NAU̯K, likely a reduction of ᴹ√NÁWAK, the latter represented in the variant word N. Nawag for “Dwarf” (Ety/NAUK).
In later writings Tolkien generally gave the root as √NUK (PE17/45; VT39/7; WJ/392), which he glossed “dwarf, stunted” in the Quendi and Eldar essay of 1959-60, clarifying that this specifically was used for things “not reaching full growth or achievement, failing of some mark or standard” and (prior to their application to Dwarves) “S naug, Q nauka, especially applied to things that though in themselves full-grown were smaller or shorter than their kind, and were hard, twisted or ill-shapen” (WJ/413). So this use as the name for Dwarves remained fairly insulting.