Beat the egg yolks and sugar until very light, about 5 minutes. Slowly add the water. Sift the flour and baking powder together. Mix with 1 cup of nuts. Fold the flour mixture into the egg yolks. Beat the egg whites until soft peaks form. Gently fold the beaten whites into the batter. Pour into a greased and floured 10-inch springform pan.
Bake at 375 degrees F for 30 minutes or until cake is done. Cool cake on a wire rack. When completely cooled, split the cake into 2 layers. Fold the vanilla, confectioners' sugar, and remaining 1/2 cup of nuts into the whipped cream. Spread whipped cream between the 2 cake layers and on top of the cake. Chill until serving time.
Garnish with fresh strawberries, if desired.
Notes: Hazelnuts are available at most stores under the name of Filberts. They should be blanched. To blanch, boil the nuts for 5 minutes and when they are cool enough to handle, remove the skins. To grind, place about 1/4 cup at a time in a blender, or chop as finely as you can with a sharp knife.