In a saucepan, combine the water and milk. Bring to boil then stir in the polenta, reduce the heat to low and simmer until thick, about 10 minutes. Stir in the cheese and remove from the heat.
Heat the olive oil in a large frypan over medium heat. Add the sausage, mushrooms and onion; cook and stir until browned. Stir in the preserves, and simmer until sausage and mushrooms are coated and sauce is smooth, about 5 minutes. Serve over cheese polenta.