Preheat oven to 350 degrees F. Grease a 3-quart baking dish; set aside. In a medium saucepan, bring the 1 cup water to boiling. Stir in sweet pepper, rice, and onion. Reduce heat to low. Cook, covered, for 15 to 18 minutes or until rice and vegetables are tender.
Meanwhile, in a large bowl, combine stuffing mix and the 2 cups water. Stir in eggs, turkey, and half of the soup. Stir in cooked rice mixture. Transfer mixture to the prepared baking dish. Bake, uncovered, for 35 to 40 minutes or until heated through.
Meanwhile, for sauce, in a small saucepan, combine the remaining soup, sour cream, and milk. Cook over low heat until heated through. Stir in sherry.
Let casserole stand for 5 minutes before serving. Spoon sauce over each serving.