Soften gelatin in 1/4 cup water. Combine remaining water and sugar in a heavy saucepan; bring to a boil. Remove mixture from heat; add softened gelatin, stirring until gelatin dissolves. Stir in lemon juice, sherry, and wine, mixing well.
Pour gelatin mixture into a lightly greased 4-cup mold, and refrigerate overnight.
Unmold jelly onto a serving plate; arrange fruit around jelly. Slice and serve with Custard Sauce.