Beat butter and 1/4 cup sugar at medium speed with an electric mixer until creamy. Add yolks and milk, beating until smooth.
Combine flour, baking powder, and salt. Gradually add to butter mixture, beating until blended; stir in vanilla. Pour into 2 well-greased 9-inch round cakepans.
Beat egg whites at medium speed until frothy. Gradually add remaining 1/2 cup sugar and powdered sugar, beating 3 minutes or until soft peaks form and sugar dissolves. Spread meringue evenly over batter. Sprinkle evenly with coconut.
Bake at 325° for 30 minutes or until meringue is golden. Cool 10 minutes on wire racks. Remove from pans, and cool completely.
Spread Filling over meringue of one layer. Top with other layer, meringue side up.