In a small mixing bowl, cream butter and sugar until light and fluffy. Add egg; beat well. Stir in lemon peel.
In another bowl, combine the flour, poppy seeds, baking powder, baking soda and salt. Add it to the creamed mixture alternating with sour cream. Beat just until combined. Spread into a greased 9-inch springform pan.
For topping, in a small bowl, combine sugar, flour, and nutmeg; gently stir in blueberries until coated. Sprinkle over batter.
Bake at 350 for 50-55 minutes or until a toothpick inserted near the center comes out clean. Cool for 10 minutes on a wire rack; remove sides of pan.
Meanwhile, in a small bowl, whisk confectioners' sugar and milk until smooth; drizzle over cake. Refrigerate leftovers.