Preheat oven to 350°F. Line a 9x9-inch baking pan with a piece of parchment paper so that there are 2 inches of overhang on opposite sides. (This will help with removing the cake once cooled.)
In a food processor, pulse the sugar and walnuts together until the nuts are finely chopped and mixture looks like coarse sand, about five or six pulses. Set aside.
In a medium sized bowl, whisk the flour, baking powder, salt, cinnamon and nutmeg. Set aside.
Fit a stand mixer with a paddle attachment. Add the butter and turn on the mixer to medium speed. With the mixer running, add in the sugar and walnut mixture and let mix until pale and fluffy, about one minute. Add the eggs one at a time until well incorporated. Add half of the dry mixture, followed by half of the milk. Repeat once more so that all of the ingredients are incorporated into the batter. Scrape down the sides of the mixing bowl and mix for a few more seconds. Remove the bowl from the stand mixer and, using a rubber spatula, fold in the zucchini.
Pour the batter into the prepared pan and spread evenly. Bake 25 minutes or until a toothpick, when inserted into the middle of the cake, comes out clean. Remove and let cool.
Fill a small pot with about an inch of water and place over medium heat. Once water begins to simmer, fit a small bowl over the pot to make a double boiler. Turn the heat to low and add the chocolate to the bowl. Stir occasionally until melted, about 3 minutes. Remove the bowl from the double boiler and let cool while you prepare the rest of the frosting.
In a stand mixer fitted with the paddle attachment, mix together cream cheese and butter until smooth. Once smooth, slowly add in confectioner's sugar. Turn the mixer off and add the cooled, melted chocolate. Turn the mixer on low and mix until the chocolate is well incorporated. Add the salt. Scrape down the sides and bottom of the bowl and run the mixer once more until smooth.
Using the parchment overhang, lift the cake from the baking pan. Invert the cooled cake onto a serving platter and peel off the parchment paper. Top with the frosting and spread evenly over the top. Sprinkle with chopped walnuts. Let the cake sit for at least 30 minutes before serving so that frosting sets. Cake can be made and frosted a day before serving.
Grant Melton is an Emmy Award-Winning Producer of the Rachael Ray Show, food writer and recipe developer. He's a contributor to Food52, NYT Cooking and Rachael Ray Every Day Magazine. He loves cookies, cocktails and kindness.