Mix marshamallows and pineapple (with syrup); let stand at room temperature about 4 hours, stirring occasionally
Stir in fruit cocktail
In small bowl, beat dry milk and iced water on high speed until stiff peaks form, about 5 minutes
Mix in lemon juice, vanilla and sugar; fold into marshamallow-pineapple mixture
Spread in refrigerator tray; cover with aluminum foil
Freeze at least 6 hours
To serve, cut into cubes and pile into 6 sherbet dishes
For company, pour grenadine or creme de menthe over cubes