Heat oven to 325°F. In large bowl, combine powdered sugar, butter and vanilla; beat until light and fluffy. Add flour, walnuts, 1/2 teaspoon cinnamon and salt; mix well.
Shape dough into 1-inch balls. Place 1 inch apart on ungreased cookie sheets.
Bake at 325°F. for 14 to 16 minutes or until set but not brown. Immediately remove from cookie sheets. Cool 3 minutes or until slightly cooled.
Meanwhile, in small bowl, mix coating ingredients. Roll warm cookies in coating. Cool 15 minutes or until completely cooled. Re-roll cookies in coating.