Heat a large nonstick skillet over medium-high heat. Add sausage to pan; cook 4 minutes or until browned, stirring to crumble. Add bell pepper, onion, and 1/4 teaspoon salt; sauté 3 minutes or until bell pepper is tender and sausage is done. Add spinach; cook 1 minute or until wilted. Remove pan from heat.
Combine milk and broth in a large saucepan; bring to a boil. Slowly add grits, stirring constantly. Cover, reduce heat, and simmer 5 minutes or until thick and grits are tender, stirring frequently. Stir in butter, black pepper, red pepper, and nutmeg. Remove from heat; stir in remaining 1/4 teaspoon salt and sausage mixture. Serve immediately.