Tried a Martha Stewart recipe for butterscotch cream cheese icing -- it involves adding a butterscotch mixture to cream cheese beaten with powdered sugar. First, it broke. Then, I brought it back together with more cream cheese and more powdered sugar. After overnight in the fridge, it was still too soft (falls off a knife). I have added almost 2 cups more PS and it's still too soft. Ideas?

The only way of fixing it would be by adding A LOT more PS. I did that once and came to find out the hard way that a cream cheese icing is not necessarily all cream cheese. Most recipes call for a base of High ratio shortening or real butter buttercream and then you add about 4 oz of cream cheese to that. So you could try making a regular buttercream batch and then adding about 2 cups of your butterscotch mix to it.

When I make fudgy buttercream I make my regular buttercream and then add about two cups ganache. That is more than sufficient to give a rich and lucious flavor and texture while it is stable enough to cover a cake without falling off.

HTH

Yes try adding more PS like A LOT more...
HTH

Thanks for the help -- I'll give it a go.