The Saddlers snatched a sixth minute lead through a Matty Fryatt header, but were left hanging on once Ishmel Demontagnac got himself sent off by punching Nicky Eaden after 30 minutes.
Ian Breckin pulled Forest level with a thumping header of his own, five minutes after the visitors had gone down to ten men.
But gritty Walsall showed great determination to soak up the pressure and hold on for a hard earned point from a 1-1 draw.
Player-boss Merson had only restored himself to the starting line-up because of an injury crisis in the Walsall ranks, but he was to have an immediate impact.
With only six minutes on the clock he fired in a corner from the left to the far post where Fryatt rose highest to plant a firm downward header into the back of the net from eight yards.
Forest had failed in a bid to sign the teenage striker earlier in the season and he seemed determined to demonstrate what they were missing out on.
But it was the home side who were largely on top following the goal, with Breckin twice forcing fine saves from keeper Joe Murphy with a pair of powerful headers.
The Forest skipper was not to be foiled however and, in the 35th minute, he again latched on to a Nicky Southall cross to power in a header which this time Murphy was powerless to stop.
It was an entertaining, end-to-end affair and it was completely out of character of the match when Walsall were reduced to ten men amid furious scenes.
Winger Demontagnac reacted angrily to an innocuous challenge with Eaden by getting to his feet to shove and then punch the Forest defender.
Even after referee Clive Penton had shown the red card, the Walsall man failed to calm down as he was then involved with an angry confrontation with his own physio, John Whitney, who had to physically restrain the player before he was eventually persuaded to make his way down the tunnel.
Merson, who had been playing in a deep role behind lone striker Fryatt, then pulled properly back into midfield.
But Walsall wee not completely without attacking impetus despite being reduced to ten men and Daryl Taylor could have put them ahead again before the break, but failed to get any power behind his close-range effort, after being picked out by the player boss.
In the second half some fine play from Wes Morgan saw him pick out Felix Bastians on the left where the young German fired in a dangerous cross to the far post but Gareth Taylor just failed to make contact.
Fryatt was also still a threat as he hit a left-foot shot that forced a good save from Paul Gerrard who palmed the rising shot away from the top corner of the net.
Forest were enjoying long spells of possession as they took advantage of the extra man but with the visitors defending well, chances were in short supply.
James Perch had three attempts from distance but was badly off target on each occasion and, when he did find his aim with a fourth attempt, he was denied by a fine save from Murphy.
Nathan Tyson was also denied by Murphy from a late free-kick as Walsall hung on for a hard fought point.