In a large saucepan melt butter with the olive oil over moderate heat. Add the shallots and cook until tender, about 2 to 3 minutes. Add the sliced mushrooms, thyme leaves, salt and pepper, cooking until all of the liquid rendered from the mushrooms evaporates. Add the Sherry and cook until evaporated. Remove a 1/2 cup of the cooked mushrooms and reserve. Stir in the flour and cook for 2 to 3 minutes. Add 3 cups of the chicken broth, bring to a simmer and cook for 15 minutes. In a blender puree the soup in batches until smooth. For a very smooth soup, pass through a fine sieve. Return soup to saucepan, bring to a simmer and whisk in the milk. Add reserved chicken broth to achieve desired consistency. Adjust seasoning with salt, pepper
and nutmeg. Lower heat and whisk in 1/4 cup of the sour cream. Keep soup warm but do not simmer or boil. Serve soup garnished with reserved cooked mushrooms and a dollop of the remaining sour cream.
Recipe courtesy of Gourmet Magazine