Cream butter in a large mixing bowl; gradually add sugar, beating until light and fluffy. Add egg yolks, one at a time, beating well after each addition.
Combine flour, baking powder, and salt; add to creamed mixture alternately with milk, beginning and ending with flour mixture. Mix well after each addition. Stir in vanilla.
Pour batter into 2 greased and floured 8 - inch round cake pans. Bake at 375° for 20 to 25 minutes or until a wooden pick inserted in center comes out clean. Cool in pans 10 minutes; remove layers from pans and cool completely.
Spread Caramel Frosting between layers and sprinkle with 1/2 cup chopped nuts. Spread top and sides with frosting, and sprinkle with remaining 1/2 cup nuts.