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Preheat the oven to 350 degrees F. In a small bowl, toss the cranberries with the 1 tablespoon sugar and set aside. In a large bowl, cream the butter and remaining 2/3 cup sugar. Beat in the egg and vanilla. In another bowl, stir together the flour, baking powder, baking soda, cinnamon, salt, and nutmeg. In a separate bowl, combine the applesauce and milk. Add the flour mixture and the applesauce mixture alternately to the creamed mixture. Beat well. Stir in the cranberries and walnuts. Pour into 1 large or 2 small greased loaf pans. Bake for 50 minutes, or until a toothpick inserted in the center comes out clean. Remove to a wire rack and let cool before slicing.