Preheat oven to 325°, thoroughly butter 10" Bundt pan using 2 tbsp butter.
Sift together flour, baking powder, baking soda, and salt. Set aside.
Beat 1 1/2 cups unsalted butter (3 sticks) and sugar together until light and fluffy. Add eggs one at a time, beating well after each addition. Add sour cream and first 1 1/2 tsp of vanilla, beating well to combine.
Gradually add flour mixture, mixing well without overbeating. Scrape down sides and bottom of mixing bowl and beat for an additional 30 seconds to make sure flour is completely mixed in.
Combine brown sugar, walnuts, and cinnamon in small bowl.
Spoon 1/4 of prepared batter into Bundt pan. Sprinkle with half of nut mixture. Top with half of remaining batter, using spatula to carefully even out batter. Sprinkle second half of nut mixture over batter. Spoon remaining batter over nut mixture and again carefully even out with spatula.
Combine last 2 tbsp of vanilla with water and pour over coffee cake.
Bake in 325° oven for 60-70 minutes, until toothpick tester has just a few moist crumbs.
Cool 10 minutes in pan on wire rack. Use knife to run along edges of pan before turning cake onto wire rack to cool completely. Dust with powdered sugar if desired.
Notes
Freezes well, wrap in heavy duty aluminum foil. Allow to thaw completely in foil before unwrapping (this allows any condensation to gather on the surface of the foil, not on your cake!).