Beat 1 cup butter at medium speed with electric mixer until fluffy; gradually add 2 cups sugar. Add 4 egg yolks one at a time, blending well after each.
Combine flour and baking powder. Add this alternatively to mixture with milk, beginning and ending with flour mixture. Add vanilla.
Beat egg whites at high speed until peaks form. Gently fold in egg whites into batter mixture. Spoon into three greased and floured pans.
Bake at 350 degrees for 18-20 minutes until done. Cool on wire racks for ten minutes. Remove cakes from pans and cool on wire racks.
Spread lemon filling between layers. Spread cream cheese frosting over all and cover top and sides with coconut. Garnish with lemon slices.
For lemon filling: Combine 1 cup sugar, cornstarch and boiling water in medium pan. Cook while stirring until dissolved. Temper eggs. Then add eggs to cooked mixture. Whisk in lemon juice and rind. Cook whisking constantly until mixture is thickened. Remove from heat. Stir in butter. Cool completely. (Do not stir once cooled as fillings made with cornstarch will breakdown and liquefy if stirred; just spoon on).
For cream cheese frosting: Beat butter and cream cheese until smooth. Gradually add powdered sugar. Stir in vanilla.