Surely tho that's why using him is good, to be able to use others S / F values, making your crappy fight 2 orcs better

But surely you don't just use him for his courage?

Ok then, one or two of them are a little more ambiguous, but I would say this:
1st Khamul (obvious reasons, he can turn a serious defeat into an overwhelming victory)
2nd The Betrayer (seriousy deadly, but no protection hence 2 and not 1)
3rd The Knight of Umbar (again powerful, but more circumstancial than KE and BT as it relies on enemies)
4th The Dwimmerlaik (not overwhelming on its own, abuse when used in cpnjuction with Gothmog, can be powerful)
5th The Tainted (helps with spells,, spirits, cavalry and bezerkers, he's easier to describe as useful rather tghan powerful
6th The Dark Marshal (some people put him above the Tainted, because his inspiring leader is useful, and he can make MKs common, however there's plenty of cheap high courage hers, fight value is circumstansual, and there are plenty of commons)
7th The Shadow Lord (definately not very powerful, useful against crossbows etc, but archery in general isnt too powerful, if it was, he'd be much higher, good at protecting low defence high cost troops though)
8th The Witch-king (again, cos of his high cost many people put him last, hes rules aren't the best and he's costs a lot more, however 3 might alone makes him okish, and his rule is useful to magic snipers)
9th The Undying (neither part of his rules is partiicularly good, of the cheaper wraiths, he is the most balanced pts wies, as his rules are also veery circumstantial, a lot of good armies go without magic, so itt often is completely pointless)

Ok then, one or two of them are a little more ambiguous, but I would say this:
1st Khamul (obvious reasons, he can turn a serious defeat into an overwhelming victory)
2nd The Betrayer (seriousy deadly, but no protection hence 2 and not 1)
3rd The Knight of Umbar (again powerful, but more circumstancial than KE and BT as it relies on enemies)
4th The Dwimmerlaik (not overwhelming on its own, abuse when used in cpnjuction with Gothmog, can be powerful)
5th The Tainted (helps with spells,, spirits, cavalry and bezerkers, he's easier to describe as useful rather tghan powerful
6th The Dark Marshal (some people put him above the Tainted, because his inspiring leader is useful, and he can make MKs common, however there's plenty of cheap high courage hers, fight value is circumstansual, and there are plenty of commons)
7th The Shadow Lord (definately not very powerful, useful against crossbows etc, but archery in general isnt too powerful, if it was, he'd be much higher, good at protecting low defence high cost troops though)
8th The Witch-king (again, cos of his high cost many people put him last, hes rules aren't the best and he's costs a lot more, however 3 might alone makes him okish, and his rule is useful to magic snipers)
9th The Undying (neither part of his rules is partiicularly good, of the cheaper wraiths, he is the most balanced pts wies, as his rules are also veery circumstantial, a lot of good armies go without magic, so itt often is completely pointless)

So Khamul, is he best in your lowest defence formation?

Khamul in a large CHEAP formation.

He does considerably less for you in a formation of 6 companies of Uruk Hai or Easterling Pikemen than he does in with common orcs that are less than half the price.

Khamul is most useful when he is redirecting hits from his formation onto troops that are more expensive. If he is bouncing 1/3 hits on your 35 point Uruk Hai but has to put them onto 15 point goblins that is nice and all, then for every 70 points of your Uruk-Hai that your opponent kills, Khamul kills 15 points of Goblins. Compare to putting him in with 15 point orcs and being able to redirect 1/3 of hits onto Uruk Hai. For every 30 points of orcs your opponent kills, Khamul kills 35 points of Uruk-Hai. In that circumstance it actually becomes better for your opponent to avoid Khamul's formation entirely rather than attack and kill more of himself than the enemy.

I would place the DM higher than the Tainted (unless you're playing as Angmar) especially in smaller games. If you don't have that many epics, then you can really benefit from his high fight/courage. You can also really benefit from having some of the best cavalry on the side of evil count as commons. The Undying should be higher just because he can be amazing against Elf armies. As it is, they are all overpowered. If they had Mastery levels of 2, then you upgrade the WK for 75 pts and he is upgraded to mastery level 3, they would not only still be amazing, but they would actually make sense with what was in the book and the WK would jump up on the list by a lot.