Cook onion, chopped sweet pepper, and garlic in 2 tablespoons butter or margarine in a large saucepan about 5 minutes or until tender. Stir in soup, milk, and black pepper. Heat, stirring occasionally, until bubbly.
Layer half of the potatoes in a greased 3-quart oval or rectangular baking dish. Cover with half of the soup mixture. Sprinkle with half of the soup mixture. Sprinkle with half of the Parmesan cheese. Layer remaining potatoes and soup mixture atop. Cover dish with foil.
Bake in a 325 degree F oven for 1-1/2 hours or until nearly tender. Uncover and sprinkle with a mixture of bread crumbs, the remaining Parmesan cheese, and melted butter. Bake for 15 minutes more or until potatoes are tender and crumbs are golden. Let stand 15 minutes before serving. Garnish top with sweet pepper rings, if desired. Makes 12 servings.