In a Dutch oven or large saucepan, add the Au gratin potatoes and the seasoning packet along with the water, corn and tomatoes. Stir together.
Bring the mixture to a boil then reduce the heat to a simmer. Cover and simmer for 15-18 minutes, stirring often, until the potatoes are just tender. Make sure that the potatoes stay under the liquid the entire cooking time.
Stir in the smoked sausage, milk, Velveeta cheese and hot sauce. .
Cover and let simmer another 5 minutes, stirring often, until the Velveeta has melted.