1) Tobias becoming a nothlit
Honestly I'm surprised this one isn't higher on more lists. Its definitely implied that he did it on purpose, but in my mind that makes this moment more saddening, not less. One of the (many) things that kept me reading this series in the early going was that they didn't shy away from such a hard hitting event so early on in the game.
2) Arbon trapped as a Taxxon forever
Yeah, he was kind of a jerk, but this moment always stuck with me, particularly given his later role in the anti-Yeerk movement.
3) Pretty much the entire 3rd book (Tobias dealing with his new life as a hawk and struggling with interactions with the Animorphs)
People have already mentioned and talked about this one. There are any number of events within this book that could make the list on their own, but I'll lump it together for the sake of fitting more events. Some highlights:
*Tobias confessing to Rachel that he doesn't remember what he looked like
*Seeing the group nearly end up stuck as half-wolves, not only with the look of hatred Marco sends Tobias's way but also his reaction to their celebration of not being stuck
*Freaking out in the mall and nearly crashing into the window (saved by Marco's intervention)
4) Rachel's death
Honestly, this one SHOULD be number one, but for some reason the above events all had more of an impact.
5) Release of the quantum virus on the Hork Bajir home world
One of those moments (when the Hork Bajir is triumphantly holding the container with the virus and destroyed by it) that I have so clearly pictured in my head. Really tragic stuff, and really the first thing that made me really dislike the Andalites.
6) Elfangor's death
Only as low as this because the reader is processing so much other stuff at this stage in the book.
7) The moment when its revealed that most of the auxiliary Animorphs are not healed and really are being unfairly used
I saw someone else discuss this one. Ditto to what they said.
David apparently killing Tobias and gloating about it
Yeah, he ended up fine in the end and David's belief that he was dead was ultimately his undoing, but unlike Jake's death in MM3, I really BELIEVED Tobias was dead at this moment.
9) Jake falling apart on the witness stand when accused of genocide
Probably saddening because the attorney was at least partially right. Wasn't this killing of defenseless Yeerks exactly what Elfangor so loathed about Prince Alloran in the Chronicles?
10) Tom trying to warn Jake about the sharing and Jake's realization that his brother really is a controller
11) The Chapman parents' futiley fighting their Yeerks when realizing their daughter may be in danger
The last two make the list because they are really are the first two instances in which we really understand the futility of being a controller. These moments were, in my mind, critical early-book moments for establishing the real emotional stakes of the war that was being fought.