Melt butter in a large nonstick skillet over medium-high heat. Add onion, squash, 1/4 teaspoon salt, and pepper; sauté 6 minutes or until the squash is almost tender. Add minced garlic; sauté 1 minute. Cover and set aside.
Bring 2 cups milk to a boil in a saucepan. Combine the remaining 1 cup milk and flour, stirring well with a whisk; gradually add to boiling milk, stirring constantly. Reduce heat to medium, and cook 5 minutes or until slightly thick, stirring constantly. Remove from heat. Add 1 cup cheese, and stir until smooth.
Combine squash mixture, pasta, and cheese mixture in a large bowl. Sprinkle with remaining 1 teaspoon salt; toss well to combine. Sprinkle with 1/4 cup parsley, chopped walnuts, lemon rind, and the remaining 1/2 cup cheese. Serve immediately.