Preheat oven to 350 degrees F (175 degrees C). Line a 9x13 inch baking dish with aluminum foil.
Place potatoes and water in baking dish and cover with aluminum foil. Bake in the preheated oven 1 hour.
In a medium saucepan over medium heat, melt together processed cheese food and butter. Stir in dry ranch-style dressing mix and milk.
Pour the processed cheese food mixture over potatoes. Return to oven, reseal and continue cooking 30 minutes, until potatoes are tender and processed cheese food mixture is bubbly.
