Line a 9x5x3-inch loaf pan with foil, extending foil over pan side edges. Butter the foil; sprinkle marshmallows over the bottom of the pan then put in the freezer while making fudge.
Lightly butter the interior of a 2-quart saucepan; add sugar, milk, chocolate, and corn syrup. Cook over medium high heat until the mixture begins to boil. Continue boiling gently, stirring frequently, until the mixture reaches the soft ball stage (see below) or registers about 234° to 238°.
Remove saucepan from heat; add butter and vanilla without stirring. Let cool for about 30 minutes, then beat with a wooden spoon until the fudge just begins to thicken. Add chopped nuts and beat for a few more minutes, until it begins to lose its gloss but is still pourable. Pour over marshmallows; score into squares when set but still warm. When fudge is firm, remove from pan using foil to lift it. Cut into squares and store tightly covered.
Cook's Note: To test for soft ball stage - Use fresh cold water each time you test the candy. In about 1 cup of cold water, spoon about 1/2 teaspoon of hot candy. Put your hand into the water and push the candy to form a ball. Gently pick the formed ball up (if it will not form a ball, it is not done) the soft ball will flatten slightly when removed from water.