In 4-quart Dutch oven cook onion, garlic, and Italian seasoning in hot butter over medium heat for 5 minutes or until onion is tender, stirring occasionally.
If using sherry, remove Dutch oven from heat; slowly pour in sherry. Return to heat; cook and stir for 1 minute. Add broth and potato. Bring to boiling. Simmer, covered, for 10 minutes or until potato is tender. Remove from heat.
Set aside 2 cups of the spinach. Stir remaining spinach, half at a time, into soup just until wilted. Cook about 5 minutes.
Transfer soup, half at a time, to a food processor or blender; cover and process or blend until smooth. Return to Dutch oven; heat through. Season with salt.
To serve, top with reserved spinach, watercress, Parmesan, and tomatoes.