In a large saucepan, bring the water, milk, 4 tablespoons butter and salt to a boil. Remove from the heat; stir in potato flakes. Let stand for 30 seconds or until liquid is absorbed. Whip with a fork until fluffy. Stir in sour cream and cheddar cheese.
Spoon half into a greased 2-qt. baking dish. Top with sausage and remaining potatoes. Sprinkle with Monterey Jack cheese.
Melt remaining butter and toss with bread crumbs; sprinkle over the top. Bake, uncovered, at 350° for 30-35 minutes or until heated through and edges are golden brown. Yield: 4-6 servings.