In a large bowl,cream butter and sugar until light and fluffy. Beat in egg and extract. Combine the flour,nutmeg and salt; gradually add to creamed mixture and mix well.
Divide dough into 3 portions. Roll each portion into 3/4 inch thick logs; cut into 2 inch pieces. Place on ungreased baking sheet; flatten slightly.
Bake at 350 for 12-16 minutes or until bottoms are lightly browned. Cool for 2 minutes before removing to wire racks to cool completely.
For frosting, in a large bowl, beat butter until fluffy. Beat in the confectioners' sugar,extract and enough milk to achieve desired consistency. Frost cookies. Press down with tines of a fork, make lines down frosting to simulate tree bark. Sprinkle with nutmeg.