Additional chopped walnuts and confectioners' sugar, optional
In a small bowl, combine milk and poppy seeds; let stand for 1 hour. In a large bowl, cream butter and sugar. Beat in vanilla. Combine the flour, baking powder and salt; add to creamed mixture alternately with poppy seed mixture. In a small bowl, beat egg whites until stiff peaks form; fold into creamed mixture.
Spread into two greased and floured 8-in. round baking pans. Bake at 375° for 30-35 minutes or until a toothpick inserted in the center comes out clean. Cool for 10 minutes before removing from pans to wire racks to cool completely.
In a heavy saucepan, combine sugar and cornstarch. Combine egg yolks and milk; gradually stir into sugar mixture. Cook and stir over medium heat until mixture comes to a boil; cook and stir for 1-2 minutes or until thickened. Remove from the heat; cool completely. Stir in walnuts and vanilla.
Cut each cake layer horizontally in half. Place bottom layer on a serving plate; spread with a fourth of the filling. Repeat layers three times. Refrigerate for 2-3 hours. Garnish with additional walnuts and confectioners' sugar if desired.