Grind cumin seeds, red chiles, peppercorns, cardamom seeds, cinnamon, black mustard seeds and fenugreek seeds in coffee-grinder or other spice grinder. (NOTE: You can probably find some of these spices already ground, especially cumin, cinnamon, peppercorns=ground black pepper, red chiles=cayenne pepper, and save yourself some time.) Put in bowl and add vinegar, salt, sugar. Set aside.
Heat oil in wide, heavy pot over medium heat. Add onions and fry until brown and crisp. Drain and put them in blender with 2-3 Tbsp of water. Puree to a paste. Mix with spice-vinegar mixture. This is the vindaloo paste.
Put ginger and garlic in blender with 2-3 Tbsp of water and blend into a paste.
Heat the oil remaining in the pot. Add chicken and brown lightly on all sides. Remove chicken to a bowl.
Put ginger-garlic paste in same pot over medium heat. Cook for a few seconds, then add coriander and turmeric. Stir for another few seconds.
Add chicken and its juices, vindaloo paste, and 1 c water. Bring to boil. Turn down heat, cover and simmer for an hour, stirring occasionally.