Preheat the air fryer to 360 degrees F (180 degrees C).
In a 6-inch baking dish, place the block of Colby cheese in the center then pour pasta evenly around the cheese. Pour the water directly on top of the pasta and add the Dijon, salt, and pepper, gently stirring to coat. Top with butter and shredded cheese.
Cover the dish with foil, place it in the air fryer and bake for 20-24 minutes. Remove the foil, stir in milk, and mix until the noodles, cheese, and sauce are combined. Cook for an additional 20-24 minutes or until the noodles are cooked and the top is bubbly.
Stir and serve immediately.