Cook bacon until crisp in Dutch oven. Remove bacon and crumble; set aside. Add mushrooms and celery to bacon drippings. Sauté just until tender. Add minced onions, garlic powder, chicken broth, and potatoes. Simmer over medium-low heat until potatoes are tender, about 10 minutes.
Combine water and flour; whisk until smooth. Gradually add to simmering stock, stirring constantly. Cook until thickened.
Add half and half, pepper, shrimp and crab. Heat through. Add sherry. Garnish each serving with crumbled bacon.