Preheat oven to 350 degrees. Cut squash and zucchini into 1/4-inch slices; place in a Dutch oven. Add chopped onion, 2 tsp salt and water to cover. Brint to a boil over medium-high heat and cook 5 minutes; drain well.
Stir together grated carrots, cream of chicken soup, sour cream water chestnuts and remaining 2 tsp salt; fold in squash mixture. Stir together stuffing and 1/2 cup butter and spoon half of stuffing mixture in bottom of lightly greased 13x9 baking dish. Spoon squash mixture over stuffing mixture and top with remaining stuffing mixture.
Bake at 350 degrees for 30-35 minutes or until bubbly and golden brown, covering with aluminum foil after 20-25 minutes if necessary to prevent excessive browning.