Step 3: Combine ingredients
In the bottom of your mixing bowl, dump in your powdered sugar without making a big powdery mess. You'll need all of what is in the bag, so shake it out well.
Next, take your 2 cups of coconut and pour it into your food processor. If you have a small one, you may have to do it a little bit at a time. Chop up your coconut, just to make them into shorter strands. This makes the final product less stringy and more creamy. Add the coconut to your powdered sugar.
Add your softened butter or margarine to the sugar and coconut. DO NOT soften or melt the butter or margarine in the microwave. It is best to let it sit out for a few hours on the counter. Melting it makes the resulting dough too sticky to work with, and extends the project time to several hours, due to extra freezing time.
Now, open up your can of Sweetened condensed milk. This part is important: DO NOT pour in the whole can and scrape it out. If you do this, it will be too wet and will not set up properly and will be too sticky to work with. Only pour in about 2/3 to 3/4 of the can. Set it aside to use for something else. If need be, you can add a smidgen more if the dough is too dry.
Using your mixing spoon, stir up all of your ingredients as best you can. Try to incorporate all of the sweetened condensed milk. after you have mixed in most of the milk, you'll have to get your hands in there (Please wash them first, just to be on the safe side). Believe it or not, this is a little fun. Mix and moosh it between your fingers until there are no lumps of anything, and it's nice and consistent.
Now, if you are going for a nutty cream, and only making one flavor, add your chopped nuts now and moosh them in. If it is still sticky, you can add a tiny bit of powdered sugar, but refrain from adding very much. Too much sugar and your whole batch will taste like frosting.
Put your bowl in the refrigerator for about 5 minutes, more if it is really sticky. While you are waiting, now is a good time to clean up your mess and do your dishes. If you keep on top of it, it is a less daunting task later.