Ash
You do not recall correctly DY is right. The spelling in yiddish for the word fool is נאר.
The word נער in Yiddish is pronounced Ner since as you correctly point out ayin makes a short e sound.
Words Like שבת and נר (candle) are usualy spelled the same way since they dont have vowels (in yiddish as you know the letters Aleph, Ayin, Vav … are the vowels, there are no nekudos) so there is no confusion as to how שבת is pronounced you just memorize the vowels. In yiddish the word נער is pronounced Ner it has a vowel. If you want to write Fool ie Nar the correct spelling in Yiddish is נאר it is ALSO the correct spelling for the word Nur as in only.
Of course if you incorporate a Hebrw/Aramic word for fool נער it isnt wrong, it just isnt yiddish (Then again the word נר isnt Yiddish either a candle is ליכט)