Sauté onion in butter in a large ovenproof or cast-iron skillet over medium-high heat for 5-6 minutes or until tender. Reduce heat to medium-low; stir in the enchilada sauce, green chilies and hot pepper sauce if desired.
Bring to a boil. Reduce heat; simmer uncovered until sauce mixture is reduced by half, stirring constantly. Stir in chicken.
Remove from heat. Whisk in cream cheese until melted. Stir in 3/4 cup each Monterey Jack and cheddar. Top with remaining Monterey Jack and cheddar.
Broil 3-4 inches from the heat for 1-2 minutes or until cheeses are melted. Garnish with sour cream and green onions. Serve with tortilla chips.