Preheat oven to 350°. Grease and flour a 10-in. fluted tube pan. Place sugar, cinnamon, salt and nutmeg in a food processor; process for 30 seconds. Transfer to a large bowl.
Beat in melted butter, eggs, milk, sour cream and vanilla until well blended. In another bowl, whisk flour and baking powder; gradually beat into sugar mixture.
Pour half of the batter into prepared pan. Spoon jelly over batter to within 1/2 in. of edges; top with remaining batter. Bake until a toothpick inserted in center comes out clean, 45-50 minutes. Cool in pan 10 minutes before removing to a wire rack to cool completely.
In a large bowl, combine all frosting ingredients; beat until smooth. Spread over cake; sprinkle with additional sugar and cinnamon. Refrigerate at least 1 hour before serving.
