In a saucepan, combine condensed milk and chocolate chips and cook over low heat until chocolate melts. Transfer to a bowl. Refrigerate about 30 minutes.

Meanwhile, line a 15-cup muffin pan with foil-and-paper liners. In a large mixing bowl, combine cake mix, coffee, cinnamon and chili powder. Using an electric mixer on low speed, beat in water and whole egg. Then beat 2 minutes more at medium speed.

To make meringue, clean beaters thoroughly, then beat egg whites until foamy in a nonreactive bowl (not aluminum or plastic). Gradually beat in sugar until stiff and glossy.

Preheat oven to 350F. Wrap about 1 teaspoon of chilled chocolate mixture around each macadamia nut, shaping it into a ball. Set aside.

Fill muffin cups 2/3 full of cake batter. Spoon 1 heaping tablespoonful of meringue on top and smooth out evenly, making sure meringue extends all the way to paper liners and no batter is exposed. Place a chocolate ball in exact center of meringue; do not push in. Bake until a toothpick inserted in the side of a cupcake comes out clean, about 25-30 minutes.

Cool in pan on rack, then carefully loosen meringue with tip of sharp knife and remove cakes from pan. Place on wire racks set over waxed paper and cool completely.

In a small bowl, combine confectioners' sugar, cocoa powder, vanilla extract and enough milk to make a glaze of drizzling consistency. Spoon glaze on top of meringue, letting it drip down sides, and serve.