Preheat oven to 325 degrees. Cream butter, sugar and egg yolks. Add milk and mixed and sifted dry ingredients alternately. Add pecans, and well beaten egg whites. Bake until toothpick inserted in center comes out nearly clean (begin checking around 50 minutes). To prepare Frosting: Add enough water to sugar to prevent it from scorching. Cook to syrup, beat in marshmallows, whip until creamy, and spread on cake. Decorate with pecans.