Melt the butter in a large saute pan on medium heat, add onion and saute for 10-15 minutes or until carmelized; remove from heat; and save to roll the meatballs into this onion mixture during Step 6.
Preheat oven to 400 degrees and line a RIMMED cookie sheet with foil (for easier clean up) .
Cut the crusts off the bread and break into 1/2 inch pieces.
Soak the bread in milk; squeeze so it is almost dry; and discard milk.
Mix the beef and bread in a large bowl; add salt, pepper, parsley, tarragon, lemon juice, garlic, and egg; blend well.
Shape into 1 inch sized balls; roll meatballs in caramelized onion.
Mix bread crumbs and paprika on a dinner plate; roll the meat balls in the bread crumb mixture.
Put meatballs onto cookie sheet; bake at 400 degrees for 12 minutes or until browned-CHECK after 6 minutes to see if they need turning. (If you are making pasta, start your pasta water).
While the meatballs are browning, add butter to the saute pan you started with, when almost melted add in next 1/4 cup of onion; saute onion until SOFT. (You might need to add more butter).
Add mushrooms; cook till soft-here you might want to add two tablespoons or more of water to keep things going.
Add the wine, sour cream, and milk but do NOT let it boil.
Stir in pepper and nutmeg.
Taste test to see how much salt you want to add-I added 1/4 teaspoon.
Add in spinach, if you want a bit of green vegetable; blend thoroughly.
After meatballs brown, check to see if centers are done, if not remove with slotted spoon to an oven safe casserole dish; reduce oven temperature to 350 degrees and put casserole into oven to finish cooking.
Top with sauce when cooked; flavor improves with standing.