In a medium-size saucepan, add the bacon bits and the chopped onions. Then, add the butter and melt it. Next, add the flour and whisk until all blended and you have a thick mixture.
Add the milk and the cream of mushroom soup. Whisk, over medium heat, until combined.
Add the spices and mix until incorporated, then take off the heat and add the sour cream. Mix until all combined. Set aside.
Take the sliced potatoes out of the water. Pat dry, and place ⅓ of the potatoes in the coated baking dish. Sprinkle shredded cheese over the potatoes. Then, add ½ of the milk mixture, spread evenly.
Repeat layering the potatoes, cheese, and milk mixture until the casserole dish is filled. Bake uncovered, in preheated oven for 50 to 60 minutes until the top is golden and the potatoes are nice and tender.