Questions about Sauron's Physical status in the Third Age

[Pailan]

OK, I have been through the books many times and this still nags me. Does Sauron exist in a physical form in the Third age of Middle Earth? We read at length about his "firey eye", "red eye" and so on. (Probably would make a great Visine commercial )

Yet, Gollum refers to the Black Hand of Sauron, twice and how it still has four fingers. At this point I am led to belive that the red, lidless, firey eye is a metaphor for the growing evil spiritual existance of Sauron and that while we do not get a true look at him in the Third Age he has again taken a physical form, albeit an ugly one, and is in Mordor.

I say this after talking it over with a friend, who after seeing the movie has read the books for the first time (and loved them.) His questions brought up some of my own. So I thought I would bring it to the Entmoot and see what you all think. Thanks in advance for your well reasoned and considered responses.