Heat olive oil in a non-stick skillet over medium-high heat.

Add chopped onion and minced garlic to the skillet.

Sauté the onion and garlic for about 3 minutes, until softened.

Transfer the cooked onion and garlic to a food processor or food chopper.

Add the thawed and squeezed dry spinach, fat-free sour cream, fat-free milk, light mayonnaise, white vinegar, salt, dried dill weed, and ground red pepper to the food processor.

Process all ingredients until almost smooth, ensuring no large chunks remain.

Scrape the spinach dip into a serving bowl.

Stir in the drained and chopped water chestnuts.

Cover the bowl and refrigerate the dip until ready to serve, allowing flavors to meld.