1 c  butter -- softened
1/2 c  confectioner's sugar
1 ts vanilla
2 1/2 c  flour, all-purpose
1/2 c  walnuts -- chopped

Candy Mixture
1/4 lb peppermint candy -- crushed
1/2 c  confectioner's sugar

The Filling
2 TB cream cheese -- softened
1 ts milk
1 dr red food coloring
1/2 c  confectioner's sugar
3 TB candy mixture -- see above
Cream the butter, sugar and vanilla together until fluffy.  Add the flour and walnuts and blend to form dough.  Wrap in plastic wrap and chill for 1 hour.
Candy mixture: In a small bowl combine both ingredients.  Set aside. Three tablespoons of this mixture is used in the filling and the remainder is used to garnish the cookies.
The filling: In a bowl blend together the cream cheese, milk, food coloring and the conf. sugar until smooth.  Blend in 3 T of the candy mixture.
Remove the dough from the refrigerator and for each cookie pinch off a rounded teaspoon of the dough. Form into a ball and shape around your thumb to make a little compartment in the middle. Place about 1/4 teaspoon of the cream cheese filling in the depression. Pinch the dough back together and roll it back into a ball. Repeat the process with the remaining dough and filling. Place the balls on a  nonstick cookie sheet. Bake in a preheated 350 oven for 10-12 minutes. Do not brown.
Remove cookies to a cooling rack. To garnish, roll the cooled cookies in the remaining candy mixture.