Use a knife or pestle and mortar on a chocolate bar to make chocolate dust, then add it to a bucket of milk. No experience is gained when it is made. This, combined with the fact that this item is non-tradeable, may imply that chocolatey milk is a mere novelty item and serves no practical purpose besides feeding your cat or having a drink. Because of this, and the fact that you receive no experience from making it, it is rarely made other than as the base for the hangover cure for quests.