Melt 1/4 cup butter in a large saucepan over medium-high heat; add onion and next 4 ingredients. Cook, stirring often, 5 minutes or until tender. Remove from pan; set aside.
Melt remaining butter in same saucepan over low heat; add flour, stirring until smooth. Cook 1 minute, stirring constantly. Gradually stir in milk. Cook over medium heat, stirring constantly, until thickened and bubbly. Stir in onion mixture, Lemon Blend, hot sauce, and half-and-half. Bring to a boil, stirring often. Reduce heat; stir in crabmeat. Simmer, uncovered, for 5 minutes, stirring often. Stir in sherry, and serve immediately.