Step 1Bring 1/2 cup sugar and water to boil in heavy-bottomed 2- or 3-quart saucepan, stirring constantly over medium heat. Continue boiling and stirring until all grains of sugar have completely dissolved and mixture forms a simple syrup. Remove pan from heat and stir in chocolate until melted and smooth. Set aside to cool.
Step 2Beat egg yolks in large bowl until light and fluffy. Grind walnuts with remaining sugar and matzo meal in food processor using pulse motion and stir into egg yolks. Add cooled chocolate mixture and combine thoroughly.
Step 3Using clean beaters, beat egg whites in another bowl until they hold stiff peaks, 2 to 3 minutes. Gradually fold whites into chocolate-walnut mixture, incorporating them gently but thoroughly so that no whites are visible. Pour batter into 8-inch square or 9-inch springform pan lined with parchment or wax paper. Bake in lower third of oven at 350 degrees until puffed and almost set but still a little gooey in center, 35 to 40 minutes. A toothpick inserted 1 inch from edge should come out clean.
Step 4Cool on rack 1 hour 30 minutes. When completely cool, run thin-bladed knife around edges of cake to release it from pan (or release the springform); invert onto a platter. Peel off parchment or wax paper.
Step 1Melt butter or margarine in heavy saucepan over very low heat. When half is melted, gradually whisk in chocolate, stirring well as it melts. After chocolate has been added, stir in water and beat well until glaze is completely smooth. Cool mixture 5 minutes to thicken slightly.
Step 2Using a spatula, spread glaze over top and sides of cake. Garnish with few walnut halves attractively placed in center of cake. Refrigerate about 1 hour to set glaze, but bring cake to room temperature before serving.