Combine cake mix, pudding mix, coconut milk OR water, eggs & oil & vanilla in large mixing bowl.
Blend, then beat at medium speed for 4 min's. Stir in coconut and nuts (if using).
Pour into greased & floured 8 or 9 inch round cake pans.
Bake according to the directions on the cake mix for size of pans you are using.
Cool 15 min's in pan. Remove from pan and cool on rack.
For COCONUT CREAM CHEESE FROSTING:
Cream butter & cream cheese. Add 1 box of sifted confectioners'sugar, alternately with 4 tsp milk, beating well after each addition. Add vanilla extract and beat until well blended.
Spread over sides, top and in-between layers of completely cooled cake.
Sprinkle top and sides with 2 cups of flaked coconut.
(Just an idea ... I sometimes like to prepare an extra (sm pkg) of vanilla or lemon pudding mixed w/coconut to spread in-between layers in place of frosting. Then use cream cheese frosting for top and sides of cake. Makes it more of a coconut cream style cake. Crushed pineapple is also great in-between layers too: )
PS .. Please note: I recently remade this cake using unsweetened coconut milk instead of water and preferred that method much better, and updated the recipe to show that. It's great made with your liquid of choice (coconut milk, c.nut water or even plain water) but I think it's best with milk. And just wanted to note that: )