Put the onion or shallots in a clean jar or bottle that will hold at least two cups. Pour the sherry over them, stop or seal well, and steep for at least 24 hours before using.
To use the flavored sherry, decant into a cruet or bottle. The sherry can be replenished twice, after which, discard the onion and begin in a clean jar with fresh onion.
Rinse the peppers in cold water, drain, and put them in a Pyrex or other ovenproof bowl. Bring water to a rolling boil and pour it over the peppers. Let stand one minute and drain.
Put the peppers in a clean cruet (cut glass–do not use leaded crystal), jar, or bottle that will hold at least 1½ cups. Pour the sherry over them, stop or seal well, and steep for at least 24 hours before using. Gently shake the cruet after 24 hours to distribute the peppery oils.