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Melt butter in 3-quart saucepan on medium heat. Add onion; cook and stir 5 minutes or until softened. Add flour Old Bay and parsley; whisk until well blended. Whisking constantly gradually add milk. Bring just to boil.
Stir in crabmeat. Reduce heat to low; simmer 20 minutes stirring occasionally.
Stir in sherry if desired. Heat 1 to 2 minutes. Sprinkle with additional Old Bay if desired.