Melt 1 ½ tsp. Of butter in a medium skillet over medium heat. Add the mushrooms and toss well to coat. Saute for 5 minutes, or until they are lightly browned, stirring frequently to prevent burning. Set aside.
In a large heavy bottomed saucepan (this is to prevent burning. Trust me, find a saucepan with a heavy bottom for sauces in particular), melt ¼ cup of salted butter over medium heat. As soon as the butter has melted, add the flour and whisk well. Whisk constantly, until the flour is well absorbed and the mixture has started to change color just slightly. Be careful of burning at this stage.
Slowly add the milk, continuing to whisk as you do so. This will become very thick, very quick. Just keep whisking.
Once all of the milk is added, add the chicken broth or water in the same manner as you did the milk.
Once both the milk and chicken broth have been added, stir well. Add the sauted mushrooms, onion powder, black pepper, garlic powder, paprika, salt, and Parmesan cheese. Mix well.
Reduce the heat to medium low and simmer for 5 minutes, whisking frequently to prevent burning.
Pour into a large bowl and cool completely.
Use 1 ⅓ cup to replace 1 can of condensed cream of mushroom soup in a recipe.