In a 4 quart stockpot, over medium-high heat, melt butter; add onion and garlic. Cook stirring occasionally, for 5 minutes.
Stir in mushrooms, Old Bay, 1 tablespoon parsley flakes, and Worcestershire sauce. Cook 5 minutes.
Add water and milk; simmer uncovered 15 minutes. Meanwhile, cut tops off rolls and hollow them out to make soup bowls, reserving some of the bread. Break reserved bread into small pieces and stir into soup, 1 cup at a time, until soup is suffiently thick.
Add crab meat, red bell pepper, and sherry. Adjust seasoning.
Ladle the soup into bread bowls and top with remaining parsley flakes.