Step 1Lightly butter a 10-inch springform pan. Line the bottom of the pan with parchment paper and lightly butter the paper. Heat oven to 350 degrees.
Step 2Grind the walnuts in a food processor until fine. Set aside 2 tablespoons of the nuts to sprinkle over the top of the cake. Combine the flour and baking powder and stir into the remaining walnuts until evenly mixed.
Step 3Beat the egg yolks until well-blended, then gradually beat in ? cup of the sugar. Continue beating until the mixture is light and lemon-colored and the eggs form a ribbon when dropped from a spoon. Stir in the orange zest. Stir in the ground walnut mixture.
Step 4Beat the egg whites until soft peaks form. Gradually beat in the remaining ? cup sugar until stiff peaks form. Fold a large spoonful of the beaten egg whites into the walnut mixture to lighten it, then gently fold in the remaining egg whites.
Step 5Spoon the cake batter into prepared pan. Sprinkle the reserved 2 tablespoons walnuts over it. Bake 40 to 50 minutes, until puffed and golden. Remove to wire rack to cool to warm. As cake cools, it will settle.
Step 6Combine whipped cream and oloroso sherry. Sift the powdered sugar through a small strainer into the whipped cream and stir until blended.
Step 7Serve a slice of cake with a dollop of oloroso whipped cream.