Kim's Coconut Cake

1 package yellow cake mix

1 small pkg vanilla inst. pudding

1 1/3 cups water

4 eggs

1/4 cup oil

2 cups angel flake coconut

1 cup ch. walnuts or pecans

***COCONUT-CREAM CHEESE FROSTING*** 4 tbsp oleo

2 cups angel-flake coconut

1 8 oz. pkg. cream cheese

2 tsp milk

3 1/2 cups sifted confectioners sugar

1/2 tsp. vanilla

Blend cake mix, pudding mix, water, eggs & oil in large mixer bowl. Beat at medium speed 4 minutes. Stir in coconut & walnuts. Pour into 3 greased and floured 9-in. layer pans. Bake at 350 for 35 minutes. Cool in pans 5 minutes; remove and cool on rack. Fill & frost with Coconut-Cream Cheese Frosting.

FROSTING: Melt 2 tbs. oleo in skillet. Add coconut; stir constantly over low heat until golden brown. Spread coconut on absorbent paper to cool. Cream 2 tbs. butter with cream cheese. Add milk and sugar alternately, beating well. Add vanilla; stir in 1 3/4 cups of the coconut. Spread on tops and sides of cake layers. Sprinkle with remaining coconut.