To make the frosting, with an electric mixer on high speed, beat the cream cheese, confectioner's sugar, and caramel sauce until blended. Stir in the nuts. Cover and refrigerate until ready to use.
Preheat the oven to 350 degrees F. Spray a 9-inch round cake pan with nonstick spray.
Line the bottom with wax paper; lightly spray with nonstick spray.
To make the cake, whisk together the flour, baking powder, salt, and baking soda in a small bowl. With an electric mixer on medium speed, beat the 1/2 cup brown sugar, oil, and granulated sugar until smooth. Beat in the egg, egg yolk, and 3/4 teaspoon vanilla. Alternately add the flour mixture and the milk, beginning and ending with the flour mixture and beating just until blended.
Pour the batter into the pan. Level batter by holding pan 3 or 4-inches above counter dropping it flat onto counter. Do this several times to release air bubbles and assure a more level cake.
Bake until a toothpick inserted in the center comes out clean, 25 – 30 minutes. Let cool in the pan on a rack 10 minutes. Remove the cake from the pan and let cool completely on the rack.
Meanwhile, to make the filling, combine 1/4 cup brown sugar and flour in a small saucepan. Whisk in the milk; bring to a boil. Boil until the mixture just begins to thicken, 1 – 2 minutes whisking constantly. Remove from the heat; stir in the nuts, butter, 1 teaspoon vanilla, and salt. Let cool completely.
Split the cake layer in half with a long serrated knife. Place the bottom layer, cut side up, on a serving plate. Spread the filling evenly over the layer, leaving a 1/2-inch border. Place the remaining layer on top, rounded side up. Spoon the frosting over the top, allowing it to drizzle down the side of the cake. Refrigerate until set.
Original recipe courtesy Paula Deen: Bobby's Caramel Cake