For Apple Filling: In a saucepan, combine water, sugar, cornstarch/water mix, cinnamon, nutmeg, and salt. Stir in egg yolk and apples. Cook over medium heat, stirring constantly, until thick, about 5 minutes. Remove from heat and let cool.
For Dough: In a large bowl, combine 1 1/4 cups of the flour, sugar, undissolved yeast, and salt, and set aside.
In a medium saucepan, heat the water, milk, and butter until very warm (120 to 130 degrees). Gradually add to the flour mixture. Beat for 2 minutes at medium speed, scraping the bowl occasionally.
Add the egg yolks and 1/2 cup flour; beat for 2 minutes at high speed. Stir in enough remaining flour to make a soft dough.
Divide the dough in half; roll half of the dough on a lightly floured surface to fit the bottom of an ungreased 15x10 baking pan.
Spread with the apple filling.
Roll remaining dough large enough to cover the filling. Place over the apple filling. Seal the edges of the dough together.
Snip the surface of the dough with scissors to let steam escape. Cover; let rise in a warm, draft-free place until doubled in size, about 45 minutes.
Bake at 375 degrees for 20 minutes or until evenly golden.
Make Powdered Sugar Glaze: In a small bowl, combine the powdered sugar and enough milk to get a good drizzling consistency. Start with 2 tablespoons milk in 1/2 cup powdered sugar, and work up from there. Stir until smooth.
Drizzle warm apple pastry with glaze. Let cool in pan. Cut into squares and serve.