Stir together the flour and baking powder; set aside.
In a large mixing bowl beat butter with an electric mixer on medium speed for 30 seconds. Gradually add the 1-1/2 cups sugar, 2 tablespoons at a time, beating on medium-high speed about 6 minutes total or until very light and fluffy. Add eggs, one at a time, beating 1 minute after each addition, scraping bowl often. Beat in lime peel.
Gradually add flour mixture to butter mixture, beating on medium-low speed just until combined. Beat in coconut milk or regular milk. Spread batter evenly into a greased and floured 10-inch fluted tube pan. Bake in a 325 degree F oven for 55 to 60 minutes or until a toothpick inserted near center comes out clean.
Meanwhile, for syrup, in a small saucepan combine remaining 1/2 cup sugar and lime juice; heat over medium heat to dissolve sugar.
Cool cake in the pan on a wire rack for 10 minutes. Invert cake onto a cooling rack (place a sheet of waxed paper under the rack). Prick top and sides of cake with a toothpick and brush with the syrup. Immediately sprinkle with coconut. Cool. To transport to a potluck, slice cake and arrange on a platter; cover with plastic wrap. Pack whipped cream and fresh fruit in containers with lids and place on ice in an insulated cooler. Serve slices of cake with whipped cream, any remaining coconut, and fresh fruit, if desired. Makes 18 servings.