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1. In a medium saucepan bring the 1 cup water to boiling. Stir in sweet pepper, onion, and uncooked rice. Reduce heat to low. Simmer, covered, about 20 minutes or until rice and vegetables are tender and water is absorbed.
2. Preheat oven to 350 degrees F. Grease a 3-quart rectangular baking dish; set aside. In a large bowl combine stuffing mix and the 2 cups water. Stir in chicken, eggs, and half of the condensed soup. Stir in cooked rice mixture. Spread in prepared baking dish.
3. Bake, uncovered, for 35 to 40 minutes or until heated through.
4. Meanwhile, for sauce, in a small saucepan stir together the remaining soup, the sour cream, and milk. Cook over low heat until heated through, stirring occasionally. If desired, stir in sherry.
5. Let casserole stand for 5 minutes before serving. Cut into squares to serve. Spoon sauce over squares.