Creamy Fettuccine with Mushrooms & Bacon

Cook the pasta according to package directions. Reserve 1/4 cup of the cooking liquid, drain the pasta and return it to the pot. Meanwhile, heat 1 Tbsp oil in a large skillet over medium-low heat. Add the onion and 1/4 tsp each salt and pepper and cook, covered, stirring occasionally, until very tender, 6 to 8 minutes. Stir in the garlic and cook for 1 minute. Whisk in the milk and bring to a simmer. Whisk in the cream cheese, Parmesan and nutmeg and simmer, stirring occasionally, until slightly thickened, 2 to 3 minutes. Cook the bacon in a second large skillet over medium heat until crisp, 5 to 6 minutes. Transfer to a paper towel–lined plate; break into pieces when cool. Wipe out the skillet and heat the remaining 2 Tbsp oil over medium-high heat. Add the mushrooms and cook, tossing occasionally, until golden brown and tender, 5 to 6 minutes. Toss the pasta with the cream sauce, adding some of the reserved cooking liquid if the pasta seems dry. Fold in the mushrooms, bacon and tarragon.