FOR CAKE: Line three greased 9-inch round baking pans with waxed paper. Grease waxed paper and set aside. In small saucepan, melt chocolate with water over low heat: cool.
In a large bowl, cream butter and sugar until light and fluffy. Beat in 4 egg yolks, one at a time, beating well after each addition. Mix in melted chocolate and vanilla.
Combine flour, baking soda and salt: add to the creamed mixture in batches, alternating with buttermilk and beating well after each addition.
In small bowl and with clean beaters, beat 4 egg whites until stiff peaks form. Fold a fourth of egg whites into creamed mixture; fold in remaining whites.
Pour batter into prepared pans. Bake at 350 degrees for 24 to 28 minutes or until toothpick inserted near center comes out clean. Cool 10 minutes before removing from pans; place on wire racks to cool completely.
FOR FROSTING: In small saucepan,heat sugar, milk, butter and egg yolks over medium-low heat until mixture is thickened and golden brown, stirring constantly. Remove from heat. Stir in coconut, pecans and vanilla extract. Cool until thick enough to spread. Spread a third of frosting over each cake layer: stack lawers.
FOR ICING: In microwave, melt shortening and chocolate; stir until smooth and drizzle over cake.