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To make the meatballs, tear the bread into small pieces and add it to a medium bowl with the milk. Mix well and rest until the bread has soaked up the milk.
Add the beef, egg, parsley, garlic powder, salt, and black pepper. Mix until just combined. Shape the mixture into 24 meatballs, approximately 1 ½ tablespoons each.
In a 12-inch skillet, heat the olive oil over medium high heat. Add the meatballs and brown on all sides, about 5 to 7 minutes. Transfer the meatballs to a plate.
To make the sauce, add the butter, mushrooms & garlic to the skillet, and cook until softened, about 4 minutes more. Stir in flour and cook for 1 minute.
Add the condensed French onion soup, water, and mustard. Once combined, add the meatballs back in. Bring to a boil, reduce the heat to a simmer, and let simmer uncovered for 10 to 12 minutes or until the meatballs are cooked through and the sauce is thickened.
Remove from the heat and stir in sour cream.
Season with salt & pepper to taste, serve over egg noodles, and garnish with parsley.