Place the macadamia nuts in a food processor fitted with a steel blade and pulse them a couple of times just to chop them into large pieces. Then, place them in a non-stick heavy sauté pan and toast them over medium heat just until they turn golden, stirring constantly. Remove them to a heatproof dish or bowl and allow them to cool.
Peel and cut the bananas and papaya flesh into small chunks and toss them in the lime juice. Place the banana and the papaya chunks in a large glass bowl with the watermelon, pineapple and coconut. In another bowl mix together the yogurt and the papaya seeds. Pour over the fruit and coconut. Toss to combine. Place in a serving bowl or coconut shells. Sprinkle the toasted macadamia nuts over the top and serve immediately.