Preheat oven to 350°F. In a large bowl, cream butter and granulated sugar with an electric mixer on medium for 3 minutes. Scrape bowl. Add vanilla and water. Mix until combined. With mixer on low, gradually add flour, xanthan gum, salt and pecans. Turn mixer up to medium and mix just until a dough forms. By hand, knead in ¼ cup of the powdered sugar.
Shape 1-inch pieces of dough into finger shaped cookies. Place the remaining ¾ cup of powdered sugar in a small bowl. Dip cookies in sugar. Place on ungreased cookie sheet and bake for 14-16 minutes or until slightly golden brown around the edges.
Let cool for 10 minutes. Dip in sugar again. Serve warm or store in airtight container for up to a week.