I have just use a little bit more butter in the past and it work out ok
You can use milk, but it won't taste as good. It will have a stronger, sharper taste. I've done it, and would prefer not to again, but it is edible.
The cream of cheddar cheese soup is perfect for this.
You can use, sour cream or yogurt, coffee creamer(coffeemate), powdered or canned milk or even Philadelphia cream cheese, any of those will help with the creamy texture but any alteration is just not going to taste the same!
Even a can of cream of mushroom or broth
You can, but its not the same. I had to do this in college a few times, but it was pretty terrible.
increase the butter or margarine quotient. it will be fine.