What is queso (the sauce/dip)? Is it short for Chile con Queso?
Google is correct, in that it can be a shortening of 'chile con queso' (most typically in the US to non-spanish speakers).  But 'chile' is not the same as 'chili'.

'Chile' refers to peppers, so the dip is 'peppers with cheese'.

'Chili' is either an alternate spelling for the peppers, but more commonly in the US, it's a dish made from meat, tomatoes and chile peppers (chili con carne, literally 'peppers with meat')

And as Cindy pointed out, 'queso' may simply mean cheese and not a cheese dip.  (typically of a central or south american variety of cheese; in the US typically queso blanco, queso seca or queso fresca).  As best I can tell in the US, this is the more likely meaning when used by Spanish speakers.

update: and to make things even more confusing from an entomology standpoint: it's quite possible that 'chile con queso' led to 'queso dip' and shortly after lost its 'chile' ... and it's actually 'queso dip' that's been shortened to 'queso' by Americans.