The definition of a foil is "a secondary character who contrasts with a major character." A foil often has a great deal in common with the character he is contrasted with, but it is the dissimilarities of the two characters that make the qualities and characteristics of the main character stand out so visibly, giving important information to the reader about the main character. (Examples given are Hamlet and Fortinbras, as well as Hamlet and Horatio, and Hamlet and Laertes. Two of these men are good men; only the third is corrupt.)
I would expect that Dr. Watson is something of a foil (though perhaps not the main foil) in the Sherlock Holmes' mysteries. Watson, like the reader, is of average intelligence who sees what is before him as does Holmes. However, it is by comparing the reactions and interpretations of both men that the reader is led to witness Holmes' obviously superior abilities at observation and deductive reasoning.
For instance, Watson sees the saucer of milk, the "leash," the ventilator, the fake bell pull, and the bed secured to the floor, under the ventilator just as Holmes does. The reader shares Watson's instinct that each of these is an important clue, but no sense can be made of the significance of the clues without Holme's brilliance, and knowledge of the criminal mind.
However, in terms of the mystery, the criminal in the story is often the most effective foil as he is usually as brilliant as Holmes' but his evil nature generally pushes him to make a mistake that allows Holmes' to overcome and best the villain.
Whereas Watson is a commonplace figure each Holmes mystery, much less is known about our villain, perhaps because we cannot be sure it is Dr. Roylott until the very end. Foreshadowing is evident as we see Roylott's temper when he barges into Holmes' residence, threatening verbally and physically (with the poker)—drawing a comparison between the two men in terms of their strength personalities and physical prowess. Both are equally matched against the other alhtough the reader is unaware of just how dazzling Roylott's intellect is until the end.
However, Roylott is no match for Holmes. Roylott allows his desire for Helen's money to cloud his thinking, and he places himself at risk by selecting the very tools he chooses to bring about Helen's (and her sister's) demise.
Choosing between the two, in light of other Sherlock Holmes mysteries I have read, it stands to reason that the primary foil for Holmes will always be his arch-villain in each story.
In a literary work, the foil is the character who is fighting against or competing against the main character. If we assume (as we should) that the main character (the protagonist) in this story is Sherlock Holmes, then the foil is the one who is competing against him. In this story, it would have to be Doctor Roylott.
In the story, Roylott puts himself in competition with Holmes. First of all, he personally confronts Holmes and even tries to intimidate him by bending Holmes's fireplace poker with his bare hands. Later on, Holmes pits his wits against those of Roylott. Holmes has to figure out how it is that Roylott has killed his one stepdaughter and how he will be trying to kill the other.
So Roylott is in opposition to Holmes and that makes Roylott the foil.