In a large skillet over medium-high heat, brown the ground beef for about 5-7 minutes and drain excess fat.

Sauté diced onion and green bell pepper in the same skillet over medium heat for 5-7 minutes until softened.

Add diced tomatoes and green chilies along with Italian seasoning; let simmer for 15 minutes.

Cook spaghetti in a pot of salted boiling water according to package instructions until al dente, usually 8-10 minutes.

In a bowl, mix softened cream cheese and melted butter until smooth.

Stir in Parmesan cheese and milk to the cream cheese mixture until fully incorporated.

Combine spaghetti with the cream cheese mixture, cooked ground beef, and sautéed veggies.

Layer half of the spaghetti mixture, half of the meat sauce, and mozzarella cheese in a greased baking dish; repeat the layering.

Bake in the preheated oven at 350°F (175°C) for 25-30 minutes until cheese is bubbly and golden brown.

Let the casserole cool for 5-10 minutes before slicing and serving.