Place the gyro meat in a baking dish. Spread the uncooked kritharaki noodles over the meat. Gently stir to distribute the noodles throughout so they don't clump together and cook evenly.
Wash, clean, and slice the mushrooms. Spread them over the gyro and kritharaki mixture. Pour the tomato sauce over everything. Season with salt, pepper, and herbs.
In a saucepan, combine the milk and processed cheese with herbs. Heat over medium heat, stirring constantly for 3-5 minutes until the cheese dissolves completely. Bring to a gentle boil for 1 minute. Pour this sauce over the casserole. Top with the grated cheese.
Cover the baking dish with aluminum foil. Bake at 175°C (347°F) for 30 minutes. Remove the foil and bake uncovered for another 30 minutes until the cheese is golden brown.