In a small bowl, cream butter and sugar until light and fluffy. Gradually add flour (mixture will be crumbly). Stir in walnuts. Press into a 13-in. x 9-in. baking dish coated with cooking spray. Bake at 350° for 14-16 minutes or until lightly browned. Cool on a wire rack.
For filling, in a large bowl, beat cream cheese and confectioners' sugar until smooth. Fold in half of the whipped topping. Carefully spread over crust. Top with peaches.
For glaze, in a small saucepan, combine cornstarch and water until smooth. Bring to a boil; cook and stir for 2 minutes or until thickened. Gradually stir in gelatin until dissolved. Cool to room temperature. Spoon over peaches. Cover and refrigerate until firm. Dollop with remaining whipped topping.