Combine cocoa and 1/2 cup sugar in top of a double boiler, mix well.
Stir in egg yolks and water; bring water in bottom of double boiler to a boil.
Cook mixture, stirring constantly, for 5 minutes, set aside to cool.
Cream butter, 1 cup powdered sugar, and 1 teaspoon vanilla in a large bowl, beat in cooled cocoa mixture until smooth.
Stir in walnuts, set aside.
Beat egg whites (at room temperature) until foamy, gradually add 2 tablespoons sugar, beating until peaks are stiff, but not dry.
Fold egg white mixture into cocoa mixture, set aside.
Line bottom and sides of an 8-inch springform pan with ladyfingers, placing rounded sides of ladyfingers toward outside of pan.
Spoon chocolate mixture into pan; cover and chill 8 hours.
Combine whipping cream, 1 1/2 tablespoons powdered sugar, and 1/2 teaspoon vanilla, beat at medium speed of an electric mixer until stiff peaks form.
Spread whipped cream over chocolate mixture before serving.