1. In a medium saucepan melt the chocolate over medium-low heat, stirring constantly. Gradually stir in sweetened condensed milk till combined. Gradually stir in the water. Remove from heat. Pour half the mixture into a blender container. Cover and blend till smooth. Transfer to a bowl. Repeat with other half of mixture. Cover surface of mixture with plastic wrap and refrigerate till chilled thoroughly.
2. Stir whipping cream, walnuts, and vanilla into the chilled mixture. Freeze in a 4- or 5-quart ice-cream freezer according to the manufacturer's directions. Stir in marshmallows before ripening. Ripen 4 hours.