Preheat the oven to 350 degrees F. Grease a 1 1/2-quart Bundt or tube pan.
Sift the flour, baking powder, baking soda and salt into a bowl. Cream the butter in a separate bowl. Add 1 cup of sugar to the butter and gradually beat until the mixture is blended, 2 to 3 minutes.
Add the eggs to the creamed butter mixture one at a time, beating well between additions. Beat in the dry ingredients and sour cream alternately, beginning and ending with flour. Add the vanilla.
In a separate bowl, combine the chocolate, walnuts and the remaining 1/4 cup of sugar and cinnamon. Sprinkle a third of the chocolate and nut mixture over the greased pan. Spoon in half of the cake batter.
Sprinkle more of the chocolate and nut mixture over the batter, reserving some for the top. Pour the remaining batter into the pan. Smooth it out evenly and top with the remainder of the chocolate and nut mixture.
Bake for 45 minutes. Cool. Remove from the pan to a rack.