Cook spaghetti according to directions on the package. Cook to al dente, drain, and set aside.
Brown Ground Beef, and drain grease. Pour spaghetti sauce into ground beef and heat.
While spaghetti & ground beef are cooking, combine onions, peppers, and butter in microwave safe bowl. Cover and heat on high for four minutes. NOTE: Times may vary - start with 1 or 2 minutes and adjust timing until onions are translucent
Add cream cheese and milk to microwaved onions & pepper mixture and stir (You may need to warm the cream cheese up a few seconds in the microwave to make it easier to mix together)
In a 10 x 6 oval Pyrex dish (or similar size), put a thin layer of the spaghetti sauce on the bottom of the dish
Add the spaghetti noodles then add the cream cheese mixture, and then spaghetti sauce
Sprinkle parmesan cheese (or mozzarella if you prefer) over the top of the casserole
Bake at 350 degrees for 25 minutes
Add Fried Onions and bake and additional five minutes
Garnish with Grated Parmesan