Is it permissible to eat cereal in cold milk on Shabbos? I am aware that oats and finely ground baby food is permissible if done in a certain way. I am referring to chunky cereals such as corn flakes for example.
Yes, it is totally permissible no matter how you do it. The relevant concern here is that it's prohibited to "knead" by mixing flour with water to make dough. (That's why making a mush like baby cereal is a bit tricky; it's supposed to be made far thinner than bread dough, and made differently as well.) Corn-flakes-in-milk doesn't look anything like a bread dough.
There's no reason to prohibit that I can think of; a glance at a laws-of-Shabas book reveals no prohibition; and the common practice (in my own limited experience) is to allow it.