Take the butter out of the fridge so it can soften for both the pastry dough and the cream. Let it sit at room temperature until very soft, or warm it gently for 10–15 minutes on a warm surface or in the microwave on low power, making sure it does not melt.
Transfer the softened butter into a large mixing bowl that will be comfortable to knead in later.
Add about 2 cups of the flour and a pinch of salt, then rub everything together with your hands until the mixture looks sandy and well combined.
In a separate small bowl, whisk the egg with the water, then pour this mixture over the flour–butter base and mix again until you get a single soft, elastic piece of dough. Divide the dough into 8 equal portions, shape them into balls, place them on a flat plate, cover and refrigerate for at least 1 hour (preferably 2 hours).
For the cream, put the softened butter and the boiled sweetened condensed milk into a large saucepan or mixing bowl and whip until you get a smooth, fluffy caramel cream. You can use a stand mixer or hand mixer; the goal is a homogeneous buttercream.
Finely chop the shelled walnuts using a rolling pin or a glass bottle, crushing them into small crumbs. Avoid using a blender or food processor, as it turns the nuts into dark, oily flour instead of light, crunchy crumbs.
Dust your work surface with flour. Take one dough ball out of the fridge (leave the rest inside so they stay cold) and roll it into a very thin sheet, almost like paper, roughly the size of your baking sheet. Preheat the oven.
Carefully roll the thin sheet of dough around the rolling pin and transfer it onto the baking tray. Prick it all over with a fork 20–30 times and bake for 5–7 minutes, until lightly golden and dry but not too dark.
Transfer the baked pastry layer to a rack or board to cool completely, then repeat the rolling and baking process with the remaining dough portions until all the layers are baked.
Once all the pastry layers are completely cool, start assembling the cake. Spread the first layer with some of the caramel condensed milk cream. To keep the layers even, divide the cream visually into 8 equal parts and use one part for each layer.
Repeat the layering three more times: add a new pastry sheet on top of the cream and press it gently from above. Do not worry if it cracks a little; this will not show in the finished cake, and the gentle pressure helps the cream soak into the layers from both the top and bottom.
On top of the fourth layer, sprinkle about half of the crushed walnuts over the cream, then continue alternating pastry layer and cream with the remaining layers until you reach the top.
Sprinkle the remaining walnuts over the top layer and let the Napoleon cake rest in the refrigerator for at least 12 hours, or ideally 24 hours, so the layers soften and the flavors meld.
After resting, trim the edges of the Napoleon cake to straighten the sides and cut it into individual portions for serving.