Coat a 9x13" baking dish with oil or butter. Set it aside for now.
Cook your penne pasta according to package directions. (See Note) I cook this while the other things are being prepared. Drain the pasta and leave it in the colander until you are ready for it.
Sauté the diced onion and bell pepper with the butter in a large saucepan. Cook until they are tender.
Add in the all-purpose flour and stir to coat.
Add in the milk, stir and cook continually on low medium heat until it thickens into a rich gravy.
Turn the heat down to low and add in the cream cheese. Stir until it is melted in.
Add in 1 cup of the shredded cheddar, and let it melt in as well.
Add in the tomatoes with green chiles, diced green chiles, along with the seasonings. Stir well to combine.
Combine your cubed chicken and cooked pasta in the pan. Pour the cheese sauce all over the top, and gently stir to coat it all. You could do this in a separate large bowl if you choose, but I don't see any need to dirty another dish. Spread the mixture even in the pan.
Sprinkle the remaining cheddar cheese over the top of the casserole.
Bake for 25-30 minutes or until it is bubbly and slightly golden around the edges.
Let it rest for 5-10 minutes before serving.
Enjoy!
Notes
If you would like to make this a little closer to the classic version, substitute 12 corn tortillas for the pasta. Cut the tortillas into 1 inch squares, or strips about 1/2 x 2 inches. Layer the tortilla pieces between layers of the chicken and sauce. Top with the cheese topping and bake as directed above.
You could make this recipe keto-friendly by substituting tapioca or arrowroot starch for the all-purpose flour when thickening the sauce. Then omit the pasta and use keto-friendly tortillas cut into pieces like mentioned above.