Preparation:

Dough:
Bring 1 cup of water, butter and salt to a boil in a medium sauce pan over hight heat. Using a wooden spoon, stir in flour. Reduce heat to low and stir vigourously until the mixture forms a ball (about 1 minute). Remove from heat and while stirring constantly, gradually beat 3 eggs into the dough until thoroughly mixed into dough.

Heat enough oil (about an inch) in a heavy, high-sided pot over medium-high heat until the oil will fry a small amount of dough with large bubble (oil is ready).

Mix the sugar with the cinnamon on a plate and set aside.

Spoon the churro dough into a pastry bag fitted with a medium tip and squeeze a 4" strip of dough into the hot oil. Repeat, frying 3 or 4 strips at a time. Fry the churros, turning them once, until golden brown, about 2 minutes per side. Transfer the cooked churros to a plate lined with paper towels to drain.

When the churros are just cool enough to handle, roll them in the cinnamon-sugar.

Chocolate:
In a small bowl, dissolve the cornstarch in 1 cup of milk and set aside.

Combine the chocolate with the remaining cup of milk in a saucepan. Stirring constantly, Melt the chocolate over medium-low heat. Once chocolate is melted, whisk the sugar and the dissolved cornstarch into the melted chocolate mixture.

Reduce the heat to low and cook, whisking constantly, until the chocolate is thickened, about 5 minutes. (Add extra cornstarch if it doesn't start to thicken after 5 minutes.) Remove the pan from the heat and whisk until smooth then set aside in a warm place.