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In a small saucepan, place the onion and the bouilllon granules. Add 3/4 cup of water and bring to a boil. Simmer until onions are tender. While the onions are cooking, peel and thinly slice the potatoes, placing them in a large bowl.
Add soup and milk to the onion mixture. Season with salt and pepper,and add 3/4 cup of the grated cheese. Stir until melted. Pour sauce over potatoes and toss until all the potatoes are coated. Transfer the potatoes to a baking dish, sprinkle with the remaining cheese, and cover with foil. Bake at 350 degrees until bubbly (approximately 30 minutes).
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