Sift together flour, salt, soda and baking powder; set aside.
Add sugar gradually to butter, creaming well.
Blend in eggs, one at a time, beating well after each.
Blend in melted butterscotch morsels, mix well.
Add dry ingredients alternately with buttermilk beginning and ending with dry ingredients. Blend thoroughly.
Fold in black walnuts.
Turn into two (9-inch) round layer pans well greased and floured lightly.
Bake at 350 degrees for 30 minutes or until done. Cool.
Filling: Combine sugar and cornstarch for filling in 2 quart pan. Stir in milk, water, butterscotch and egg yolk. Cook over medium heat. Stirring constantly, until thick.
Remove from heat and add butter, coconut and black walnuts. Cool.
Spread butterscotch filling between layers and on top to within 1/2-inch of edge.
Frosting: Cream butter in bowl with wooden spoon until very soft. Slowly add sugar, mixing thoroughly; add a drop of milk at a time as mixture gets too stiff. Flavor with 1/4 teaspoon vanilla.
For chocolate butter icing, add 1/2 ounce melted chocolate. The yolk of one egg will make yellow icing. Strong coffee instead of milk will make mocha icing. Using, of course, only one flavor at a time.
Frost with Butter Frosting around sides and on top of cake to meet the filling.