Add spinach and water to a stockpot. Gently boil until the spinach has thawed. Strain the spinach, squeezing out water with a spatula. Place spinach on a dishtowel and squeeze out any remaining water. Put spinach back in stockpot.
In a saucepan, melt butter. Once it has melted, add flour. Mix together, forming a roux. Slowly add warm milk and stir until thick and creamy. Add salt and nutmeg and mix well. Pour the cream sauce over the spinach and mix. Pour mixture into a baking dish and cover tightly with foil. Bake for 30 minutes.
Keep covered until you are ready to serve.