Heat oven to 350°F. Coat two 8-inch round cake pans with nonstick cooking spray. Line bottoms of pans with waxed paper, and spray paper.
In a large bowl, whisk together flour, baking powder and salt. Set aside.
In another large bowl, beat butter and sugar on medium speed until light and fluffy. Beat in eggs, one at a time, beating well after each addition. Add vanilla and coconut extracts; beat until combined.
On low speed, beat in flour mixture in three additions, alternating with coconut milk. Beat well after each addition. Fold in chopped coconut. Divide batter equally between prepared pans.
Bake at 350°F for 40 minutes or until toothpick inserted in center comes out clean. Cool in pans on wire rack for 15 minutes. Remove cake layers from pans and cool completely.
In large bowl, beat cream cheese and butter until smooth. Beat in vanilla. On low speed, beat in confectioners' sugar until smooth.
Trim cake layers level if crowned. Place one cake layer on a plate. Spread top with preserves. Add remaining cake layer. Spread top and sides of cake with frosting. Remove skewers. Gently press shredded coconut onto sides of cake. Refrigerate 1 hour before slicing.