- Preheat oven to 350 degrees.
- Butter and flour two 8-inch cake pans.
- In bowl of electric mixer, combine flour, sugar, baking powder, salt, and nutmeg.
- Add milk, butter, and lemon extract to flour mixture and beat just enough to moisten.
- Add eggs and beat on medium-low for 2 minutes.
- Pour into prepared cake pans. Bake until toothpick inserted in center comes out clean, about 35 minutes.
- Remove from oven and let cool for 10 minutes in pan. Carefully run a knife around edge of cake, place wire rack on top of cake, and then invert whole thing so cake comes out of pan and sits on wire rack to cool.
- In double boiler, combine all ingredients except vanilla extract. Beat with hand mixer on high for 7-10 minutes or until mixture holds stiff peaks.
- Remove from heat and blend in vanilla extract.
- Take half of frosting and fold in candied cherries, almonds, pecans, sherry, and lemon juice.
- Place ⅓ of filling on cake and spread evenly over top, repeat with remaining layers.
- Once it’s all stacked, use remaining frosting to ice entire cake.
- Top with remaining ⅓ of nuts and cherries.