Combine 1/2 cup grated apple and gelatin. Let stand for 10 minutes.
In a saucepan, combine remainder of grated apple, sugar and lemon juice. Bring to a boil. Add apple/gelatin mixture. Cook for 15 minutes, stirring constantly. Cool off flame until room temperature. Add vanilla and nuts.
Pour into a well greased 8-inch square pan lined with parchment paper. Cover and refrigerate for 24 hours.
In a small bowl, combine confectioners’ sugar and cornstarch. Cut candy into 1 inch squares. Roll candy squares in sugar mixture. Store candy in an airtight container.