I'm no diet expert, but I do know a little, and I do know training. There are some basic things you could employ to drop some weight and tone up. Keep in mind these are all suggestions based on the fact that I know nothing about the amount of time you train daily, or what your normal diet is.
Cut out the milk
: Milk is healthy, but if you want to lose weight I'd cut out the dairy. Randy Couture always talks about getting rid of the dairy due to the acid it forms. Here's a good article Article
More running/bodyweight exercises
: Lifting weights is fine and very good for you, but if you want to drop weight and get lean, the first step in my book is running. Run long distances at a medium pace. Other exercises like pushups, dips, squats, pullups, etc that use your own bodyweight are also good. Jumping rope = good.
Fruits and Veggies
: Eat lots of fruits and veggies. They're very good for you...there's not much else to say here.
Keep drinking water
: You were right to drink lots of water. Although it adds waterweight, it still keeps your system clean and healthy.
Also, when you do lift, do more reps with less weight instead of low reps on heavy weight.
I'm sure there are more scientific answers that other people can provide you, but those are just some basic things that I always do. I'm 6'5" and weigh 185lbs.