In a small bowl mix together warm water, yeast and sugar and set aside. In a large bowl, mix milk, remaining 2/3 cup sugar, melted butter, salt and eggs; stir well and add yeast mixture. Add half the flour and beat until smooth. Stir in enough of the remaining flour until dough is slightly stiff (dough will be sticky).
Turn out onto a well-floured board; knead 5 -10 minutes. Place in well-buttered glass or plastic bowl, cover and let rise in warm place, free from drafts, until doubled in bulk, about 1 to 1 1/2 hours.
When doubled, punch down dough and let rest 5 minutes. Roll out on floured surface into a 15 x 20 inch rectangle.
To prepare filling: Spread dough with 1/2 cup melted butter. Mix together 1 1/2 cups sugar and cinnamon; sprinkle over buttered dough. Sprinkle with walnuts and raisins, if desired.
Roll up jellyroll-fashion and pinch edge together to seal. Cut into 12 to 15 slices. Coat bottom of a 13-by-9-inch baking pan and a 8-inch square pan with remaining 1/2 cup melted butter, then sprinkle with remaining 1/4 cup sugar. Place cinnamon roll slices close together in pans. Let rise in warm place until dough is doubled in bulk, about 45 minutes.
Preheat oven to 350 degrees. Bake 25 to 30 minutes, or until rolls are nicely browned. Cool rolls slightly.
To prepare glaze: Meanwhile, in medium bowl, mix melted butter, powdered sugar and vanilla; add hot water 1 tablespoons at a time until glaze reaches desired spreading consistency. Spread over slightly cooled rolls.