TwoBits,
As jxt127 points out, this is what is commonly referred to as a "directed" (or "penalty") strike. It is defined in Rule 6.02(c). From your description, it sounds like the umpire's application was proper in this case.
This pitch is ALWAYS called a strike, regardless of its location.
There is no rule that requires a pitcher to take a sign prior to pitching. If he chooses to take a sign, he should do so while in contact with the rubber. Under OBR, it is a "don't do that", rather than a balk, for a pitcher to take signs while not in contact.
It is, of course, a balk for a pitcher to throw a "quick pitch" (i.e. pitch before the batter is "reasonably set" to receive the pitch) when there are runners on base. However, on a directed strike, the batter is NEVER going to be reasonably set, so a "quick pitch" doesn't really mean anything in this situation.
If the directed strike is strike three, the batter is out and does NOT become a runner in the event the pitch is not "caught".
The bit about the ball being "dead" on a directed strike is brand spanking new (one of the 23 changes) in the 2006 edition of the OBR as published both by The Sporting News, and, more recently, the MLB.com website.
Prior to the change, the ball remained live during a "directed strike", but the batter was "dead".
So, I would say no, the pitcher did not balk.
JM
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