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Preheat and Prep: Preheat the oven to 350°F (177°C) and spray an 9” round or 9x9 square with at least 2 ½” deep (at least 2-inch sides) with nonstick baking spray.
Cream Cheese Layer: In a mixing bowl, combine cream cheese, vanilla extract, and powdered sugar. Mix until smooth and set aside.
Cake Batter: In another mixing bowl, cream together sugar and butter on high for 3 minutes. Mix in eggs, sour cream, and vanilla extract. Scrape down the sides and add the dry ingredients (flour, baking powder, baking soda, kosher salt, and ground cinnamon). Mix until well incorporated.
Streusel: In a bowl, combine the room temperature butter with the rest of the streusel ingredients (chopped walnuts, ground cinnamon, brown sugar, and flour). Use a fork to cut the ingredients together until well combined.
Assemble Cake: Pour half of the cake batter into the prepared baking dish. Spread the cream cheese mixture on top. Sprinkle half of the streusel mixture in the center and half of the apples on top. Add the remaining cake batter on top, followed by the rest of the apples and streusel.
Bake: Bake for 55-70 minutes, or until a toothpick inserted into the center comes out clean. Let the cake cool completely in the baking dish.
Glaze: Mix powdered sugar and milk until smooth. Drizzle on top of the cooled cake.