Preheat oven to 400°F (200°C).

In a large bowl, mix butter, confectioners' sugar, and vanilla extract until well combined.

Gradually work in flour, salt, and chopped nuts until a dough forms.

Cut each vanilla caramel into 4 small pieces.

Divide the dough into 36 equal portions.

Mold each portion of dough around a small piece of caramel, ensuring the caramel is fully enclosed.

Place the cookies on an ungreased baking sheet.

Bake for 10-12 minutes, or until set but not brown.

While the cookies are still warm, roll them in confectioners' sugar or colored sugar crystals.

Allow the cookies to cool completely before serving.