Preheat oven to 350 degrees. Cover bottoms of 3 8″ or 9″ round cake pans with parchment paper. Butter sides of pans. Microwave chocolate and water in large microwavable bowl on high until almost melted, stirring after 1 minute. Stir until chocolate is completely melted.
Mix flour, baking soda and salt, set aside. Beat butter and sugar in large bowl with electric mixer on medium speed until light and fluffy. Add egg yolks, 1 at a time, beating well after each addition. Blend in melted chocolate and the vanilla. Add flour mixture alternately with the buttermilk, beating until well blended after each addition.Beat egg whites in a small bowl with electric mixer on high speed until stiff peaks form. Gently stir into batter. Pour evenly into prepared pans.
Bake 30 minutes or until toothpick inserted in centers comes out clean. Immediately run small metal spatula around cake layers. Cool in pans 15 minutes, remove layers from the pans to wire racks. Discard parchment paper, Cool cake layers completely. Spread coconut-pecan frosting between cake layers and onto top of cake
Beat egg yolks, milk and vanilla in large saucepan with a wire whisk until well blended. Add sugar and butter and cook on medium heat until thickened and golden brown. Remove from heat.
Add coconut and nuts and mix well. Cool to desired consistency. Makes about 4-1/2 cups of frosting, enough to frost 3 cake layers or 36 cupcakes.