Cheese sauces require a bit of technique and knowledge. They contain a fair amount of fat, sodium, and protien. The protien makes cheese a challenge to work with.
The cardinal rule of any cheese sauce, whether it's made by adding cheese to a bechamel, or to hot cream or milk, if the sauce gets too hot, then the sauce will break, and the end product will be like mozzarella strands or lumps swimming in liquid.
To avoid breaking the sauce, heat the sauce base to no more than 170', scald the milk. Remove the pot from the heat source. Add the grated cheese and stir in immediatley until it is completely melted. You can add mustard powder or prepared mustard if you like. Just remember, that too much vinager (part of preapred mustard) will react with the protien as well.
I have made my own cheese product this way, simply adding a combination of swiss, sharp cheddar, and jack cheese. It's texture when cooled, can resemble everything from a semi-hard cheese, to Velveeta, to Cheese Whiz, to Nacho Sauce, depending on the ratio of milk to cheese.
Seeeeeya; Goodweed of the North