WHISK together evaporated milk, water and cornstarch and salt in small saucepan. Cook over medium heat, stirring constantly, until mixture begins to thicken. Remove from heat. Stir in morsels, butter and vanilla extract until smooth. For a smoother sauce, strain through metal strainer. Refrigerate for 1 hour.
FOR COCONUT CRUSTS:
PREHEAT oven to 375º F. Grease 12, 2 1/2-inch muffin cups. Line small baking sheet with foil.
PLACE flour, 1 cup coconut, sugar and salt in food processor fitted with metal blade. Process until finely chopped. Add butter and 1 tablespoon water and pulse until fine crumbs are formed. Divide mixture evenly between muffin cups and press onto bottom and halfway up sides. Pierce bottom of each crust several times.
BAKE crusts for 15 minutes or until light brown around edges, repiercing bottoms of crusts after 8 minutes. While baking the crust, toast remaining 2 tablespoons coconut on prepared baking sheet in same oven for 8 minutes or until light golden brown. Cool coconut crusts in cups and toasted coconut completely on wire racks.
TO SERVE, remove crusts from pans to serving platter with tip of knife. Spoon a heaping measuring tablespoon of Butterscotch Filling into each crust. Top with toasted coconut.