1. Melt 1/4 cup butter in Dutch oven over medium high heat; add chopped onion and next 4 ingredients and saute until tender. Remove from stove; set aside.
2. Melt remaining 1/4 cup butter in Dutch oven over low heat. Whisk in flour until smooth. Cook whisking constantly 1 minute. Gradually whisk in milk. Cook over medium heat, whisking constantly until thickened and bubbly.
3. Stir n onion mixture, salt and next 3 ingredients. Bring to a boil, stirring constantly. Reduce heat and stir in crabmeat. Simmer, stirring often, about five minutes. Stir in sherry.