In a large skillet (at least 10 inches), melt the butter and olive oil, and add the potatoes, garlic, and onion. Cook over medium-high heat, stirring frequently, until the potatoes begin to brown, about 15 minutes. Add the water and cook, stirring occasionally, until the water has evaporated and the potatoes can be pierced with a fork, about 10 minutes. Add the sliced kielbasa, peppers, salt and pepper, and cook until heated through and brown on the outside, stirring frequently, about 5 minutes.