In a small bowl, combine mustard seed and dry mustard. In a 1- to 2-quart stainless steel or nonreactive saucepan, combine remaining ingredients.
Simmer, uncovered, on medium heat until reduced by half, 10-15 minutes. Pour the mixture into the mustard mixture.
Let mixture stand, covered, at room temperature for 24 hours, adding additional vinegar if necessary in order to maintain enough liquid to cover seeds.
Process the seeds and mixture in a blender or food processor until pureed to the texture you like --this can take at least 3 or 4 minutes. Some prefer whole seeds remaining, others a smooth paste. The mixture will continue to thicken. If it gets too thick after a few days, stir in additional vinegar.
Scrape mustard into clean, dry jars; cover tightly and age at least 3 days in the refrigerator before using.
To water bath, ladle jars, leave 1/2" headspace and process 15 minutes.