PREPARE cake batter and bake as directed on package for 2 (9-inch) round cake layers, stirring 2/3 cup coconut into batter before pouring into prepared pans. Cool cakes in pans 10 min. Invert onto wire racks; gently remove pans. Cool cakes completely.

MEANWHILE, beat dry pudding mix, milk and sugar in large bowl with whisk 2 min. (Mixture will be thick.) Stir in Cool Whip. Refrigerate until ready to use.

PLACE 1 cake layer on plate; spread top with 1 cup pudding mixture. Sprinkle with 3/4 cup of the remaining coconut; cover with second cake layer. Frost top and side with remaining pudding mixture; press remaining coconut into pudding mixture. Refrigerate 1 hour.