Soften the gelatin in a bowl with the water. Pour in the milk and completely dissolve the gelatin. Let it sit while you prepare rest of filling, stirring it every now and again to keep gelatin from separating and settling to bottom.
Sweeten 2 cups of the cream with 1 cup of the sugar and beat it with a handheld electric mixer until it is fairly stiff. Add vanilla and fold it in. Stir in dissolved gelatin and gently but thoroughly fold it into whipped cream and set it aside.
Cut cake into ladyfinger-sized pieces, about 1/2-inch thick by 1-inch wide and as long as your mold is deep. Line bottom and sides of a 3-quart mold or bowl with cake, being sure that there are no gaps in it. Hold back enough cake to cover top of mold or bowl. Sprinkle cake with sherry and spread it with a thin layer of jam or fruit preserves, if using.
Beat egg whites to stiff but not dry peaks with a handheld electric mixer, then fold thoroughly into whipped cream and gelatin filling. Spoon filling into cake-lined mold, making sure there are no gaps or air pockets between filling and cake. Press reserved cake on top of filling.
Chill until cream is set, 4 to 6 hours. When you are ready to serve, gently run a knife around edges of mold to make sure that the Charlotte has not stuck to it, then invert onto plate. Carefully lift off mold.
Lightly sweeten remaining 1 cup cream with remaining 1/4 cup sugar and beat until it is stiff. If you like, you can put it into a pastry bag and pipe it onto the Charlotte, or simply spoon it on, using it to cover any gaps or splits in outer layer of cake. Garnish with fresh fruit.
Consumption of raw or undercooked eggs, shellfish and meat may increase the risk of foodborne illness.
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