In large bowl, combine 1 1/2 cups flour, sugar, undissolved yeast, salt, and herbs.
Heat milk, water, and 1/4 cup butter until very warm (120-130 degrees F); stir into dry ingredients. Stir in egg and enough remaining flour to make soft dough.
Knead on lightly floured surface until smooth and elastic, about 4-6 minutes. Cover; let rest on floured surface 10 minutes.
Divide dough into 3 equal pieces. Roll each piece to 30 inch rope. Braid ropes; pinch ends to seal. Tie knot in center of braid; wrap ends around knot, in opposite directions, and tuck under to make round loaf. Place on greased baking sheet. Cover; let rise in warm, draft-free place until doubles in size, about 20 to 40 minutes.
Bake at 375 degrees F (190 degrees C) for about 30 to 35 minutes or until done, covering with foil during last 10 minutes of baking to prevent excess browning. Melt remaining butter; brush over loaf. Sprinkle with additional herbs, if desired. Remove from sheet; let cool on wire rack.
