I can understand where they are coming from. Jewelry isn't allow because serious injuries can and do occur. I used to run X-country in HS and I remember several people (in practice, not an actual race) hurt themselves because the jewelry got caught on something while they run. I realize it is hard to imagine, but even a braclet can become entangled. Do I think they should have come down on them, no. They should have asked them to remove it before the race (will 15 minutes without cause that much problems) and then if the student didn't, disqualify them.
And no, watches are not allowed to be worn during the race for many reasons, at least not by IHSA rules (maybe in VA they can, but not in IL), unless those have been changed recently.