In a Dutch oven, over medium heat, cook sausage, onion and garlic in oil until onions are tender.
Add green pepper, mushrooms, salt and seasoning; continue to cook for 4 minutes. Stir in tomatoes, water and basil. Simmer, uncovered, for 20-25 minutes.
Add prepared spaghetti to sauce; toss to coat evenly.
Spoon one-half of the pasta mixture into a greased 2-1/2 quart baking dish.
Sprinkle with one-half of the cheese. Top with remaining pasta mixture and cheese.
Bake, covered, at 375 degrees F for 20 to 25 minutes.