In a small saucepan, combine sugar and cornstarch; gradually stir in water until smooth. Bring to a boil; cook and stir 1 minute until thickened. Remove from heat. Stir a small amount of hot filling into egg yolks; return all to pan, stirring constantly. Bring to a gentle boil; cook and stir 1 minute. Remove from heat; stir in butter and lemon peel. Gently stir in lemon juice. Refrigerate until cool.
In a bowl, combine flour and nuts. Cut in butter until mixture resembles coarse crumbs. Press onto bottom of greased 13"x9" baking dish. Bake at 350' for 15-20 minutes until edges are golden brown. Cool on a wire rack.
In a mixing bowl, beat cream cheese and powdered sugar until smooth; carefully spread over crust. Spread with cooled lemon mixture. In another bowl, beat milk and pudding mixes on low for 2 minutes; beat in vanilla. Fold in half of whipped topping. Spread over lemon layer. Spread with remaining whipped topping. Chill at least 4 hours before cutting.