Make cinnamon sugar: On a medium plate mix sugar and cinnamon together, set aside.
Make the dough for the churros: Add water, sugar, salt, and butter into the medium pot, bring to a boil, then take the pot off the heat and add the flour.
Mix the dough with a wooden spoon until it forms a smooth ball. The dough will be thick.
Transfer the dough into a piping bag fitted with a star-shaped tip (mine was 11 mm/0.4 inch in diameter, you can use a larger one and fry the churros a bit longer).
Fry the churros: In a medium pot heat up the oil (make sure that you have enough oil in the pan to cover the churros so that they float freely while frying), the oil must be well heated (it‘s best to check the temperature with a thermometer, it should be about 180°C/ 356°F).
Gently drop 2-3 churros at a time into the heated oil (mine were about 15 cm/6 inches long), cook for about 4 minutes or until golden (thicker churros may need a longer cooking time), turn them over in the middle of this time so that they cook evenly (using two forks or tongs), adjust the heat as needed. Remove them with a slotted spoon/tongs on a plate lined with paper towels to drain.
Roll the churros in cinnamon sugar while still warm.
Repeat with remaining dough.
Make the chocolate sauce: In a small pot, heat the cream until very warm (do not let it boil), remove from the heat and add the chopped chocolate, mix until smooth, thin with a small amount of milk until the sauce has the preferred consistency. The sauce will thicken as it cools.
Serve churros with the chocolate sauce. They are the best when freshly made or up 2-3 hours after frying, after that time they won't be crispy.