1. Prepare cake batter as directed on package; stir in 2/3 cups of the cocnut. Pour evenly into 2 round cake pans. Bake as directed on package. Cool 10 minute. Remove cake layers from pans to wire racks; let cool.
2. Pour milk into medium bowl. Add dry pudding mix and sugar. Beat with wire whisk 2 minutes or until well blended; the mixture will be thick. Gently stir in whipped topping; refrigerate 15 minutes.
3. Place 1 of the cake layers on a serving plate. Spread top with 1 cup of the pudding mixture. Sprinkle with 3/4 cup remaining coconut and cover with the second cake layer. Spread top and sides with remaining pudding mixture. Press remaining coconut into pudding mixture. Refrigerate at least one hour. Store leftover cake in refrigerator.
4. garnish with lime rind if desired