Spread 1/2 cup of the coconut in a shallow pan and bake until lightly toasted; set aside.
In a medium bowl, beat eggs. Stir in condensed milk, water, vanilla, salt, and nutmeg until well blended. Stir in remaining 1/2 cup coconut. Pour into partially baked pastry shell. Sprinkle with toasted coconut.
Bake 10 minutes; reduce oven temperature to 350° and bake 25 to 30 minutes until knife inserted in center comes out clean. Cool on a wire rack. Serve within 2 hours or refrigerate. Serve chilled or at room temperature. Refrigerate leftovers.
NOTE: To make Custard Pie, leave out coconut and proceed as above.