Just because he isn't a very good OC doesn't mean he's not a good coach. I doubt the guy is worthless as a coach. We all bring different strengths and weaknesses to the table in life. A weakness in one area of my life doesn't negate the strengths in others. If he's been retained (rather than let go) it means he brings some sort of value.
I'm not upset by Sheridan coaching QBs because I felt he couldn't cut it as a OC. Firstly, I've always been forgiving when a coach struggles to make a step up. Be it just at the NFL level, or from position coach to coordinator, or coordinator to head coach. A lot of people seem to want to write someone off as a failure just because they failed as a head coach.
McElwain for instance only got a WR coaching job after losing the Florida head coaching job. The guy won a couple national championships as an OC, he was head coach at Florida where he wasn't an absolute dumpster fire (worst full season was 9-4), but the only job waiting for him was WR coach? It's an odd sort of recency bias that is often repeated.
Anyway, despite my criticism of handling QBs with his play calling, that doesn't mean Sheridan's bad with QBs. It's a completely different thing to develop a relationship with a QB, to coach him in practice and try to develop his skills. For all I know he might have been a crucial part of Penix's development for example. I just felt he couldn't handle the actual game day stuff well and it's not necessarily the same thing.
There is one other aspect though, if Sheridan is making over a million guaranteed (I assume it was a two year guaranteed contract), it would be foolish to cut him loose with the new coaching rules. Put him to work if he's going to get paid anyway. If QB coach is where he's believed to be a good fit, so be it.