I don't have the information to settle the question but have some a bit that that may shed some light.
I'm relatively sure that Emily was the first wife of James Wood(s); so, Margaret, if James's and Elizabeth's daughter, was born after Emily's death, making her fairly young to be Paul Sherley's wife (who was about 12 years younger than him).
An inference I draw is that there were several Wood(s) marriages for Sherley's family. I have found a hint that his sister Mary was married to a Wood (and a Shultz) before her Roach marriage. In 1880, in Phelps County, MO, Mary S. and H. W. (Hugh) Roach have combined families that includes his stepdaughters (her daughters?) Amanda Wood, 22, and Emeline Shultz, 13. They were not in his family in 1870.
Given this, I would look for Sherley's wife and Mary's first husband as being brother and sister to James Wood.