Blend coconut milk and cream of coconut in blender until smooth, about 1 minute. Transfer to bowl; stir in water and ½ cup flaked coconut. Chill until very cold.
Process cold coconut mixture in 2-qt. ice cream maker, according to manufacturer's instructions; transfer to freezer. Freeze until firm.
To serve, scoop into dessert bowls and garnish with more flaked coconut, if desired.
To make this coconut sorbet without an ice cream machine, follow recipe through step 1. Then, transfer coconut mixture to freezer-safe bowl and transfer to freezer. Freeze until frozen, vigorously stirring coconut mixture every 30 minutes, about 3 hours. Then cover and keep frozen until ready to use. Proceed to step 3 of recipe.