Preheat oven to 350°F. Spray or grease 9 x 13 or similar size baking dish.
In a medium skillet, melt 1 TBSP butter. Over medium-high heat, saute the onions and green pepper until tender, about 3-5 minutes. Set aside.
In the bottom of a large bowl, mix the sour cream with paprika, salt, pepper, nutmeg and cayenne until distributed. Melt remaining butter and add the bowl along with smoked sausage, potatoes, cheese, and sauteed vegetables. Stir to combine.
Spread the mixture evenly in the prepared pan. Bake 40 - 45 minutes until golden brown.
Cool casserole 5 minutes before cutting and serving.