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 to boil, stirring occasionally.
Stir in crabmeat. Reduce heat to low; simmer 20 minutes, stirring occasionally.
Stir in sherry. Heat 1 to 2 minutes. Sprinkle with additional Old Bay, if desired.