In a large bowl; cream butter and 1/2 cup confectioners' sugar until light and fluffy. Beat in vanilla and lemon peel.
Combine flour and salt; gradually add to creamed mixture and mix well. Stir in walnuts.
Shape tablespoonfuls of dough into crescent shapes. Place 2 in, apart on ungreased baking sheets. Bale at 375 degree for 10 - 12 minutes or until edges are lightly browned.
Place sugar in a food processor. Split vanilla bean and scrape seeds into food processor. Discard vanilla bean. Pulse mixture until combined. Transfer to a small bowl; stir in remaining confectioners' sugar.
Coat warm cookies with sugar mixture. Cool completely on wire racks. Store in airtight container.