Preheat oven to 350 degrees F.
Melt butter in a medium saucepan, saute onions until tender. Once the onions are tender remove the skillet from the heat and stir in the diced tomatoes and chilis, sour cream, and soup. Mix until well blended.
Remove 3/4 cup of the mixture for the sauce.
Fold in the chicken and 1 cup of the cheddar cheese to the mixture that remains in the skillet.
Divide the chicken mixture into 10 equal parts and place on the tortilla shells. Roll the tortillas up and place in an ungreased 9 by 13-inch baking dish.
Combine the reserved 3/4 cup of sauce and the milk. Spoon the sauce over the tortillas. Place in the preheated oven and bake for 30 Minutes.
Remove from the oven and sprinkle with the remaining cup of cheese. Place the tortillas back in the oven and heat until cheese is melted.
Serve with sour cream or salsa.