1In large bowl, combine sugar, butter, cream cheese, lemon peel, salt, almond extract, vanilla and egg yolk; blend well. Lightly spoon flour into measuring cup; level off. Add flour; mix well. Cover with plastic wrap; refrigerate 2 hours for easier handling.
2Heat oven to 375°F. On lightly floured surface, roll out 1/3 of dough at a time to 1/8-inch thickness. (Keep remaining dough refrigerated). Cut with floured 2 1/2-inch fluted round cookie cutter. Place half of cookies 1 inch apart on ungreased cookie sheets. Cut 1-inch shapes from centers of remaining cookies. Place cookies and small cutouts 1 inch apart on separate ungreased cookie sheets.
3Bake at 375°F. For small cookies, bake 6 minutes; for large cookies, bake 7 to 10 minutes or until light golden brown. Immediately remove from cookie sheets. Cool 5 minutes or until completely cooled.
4Spread bottom of each whole cookie with about 1 teaspoon preserves. Sprinkle powdered sugar over cookies with cut-out centers. To make each sandwich cookie, place one powdered sugar cookie over preserves on whole cookie.