Preheat oven to 325 degrees F (165 degrees C). Cover a wire rack with waxed paper. Pour 1/4 cup confectioners' sugar into a shallow bowl.

Cook and stir pine nuts in a nonstick skillet over medium heat until browned, 1 to 3 minutes. Transfer nuts to a food processor and grind until fine.

Beat butter and cream cheese together with an electric mixer until smooth. Beat in 3/4-cup confectioners' sugar, lemon juice, lemon zest, vanilla extract, and lemon extract, respectively, beating well after each addition. Add ground pine nuts and mix until smooth and creamy.

Whisk flour and salt together in a bowl. Gradually add flour mixture to butter mixture and beat until dough is just-combined. Drop dough in small scoops onto a baking sheet.

Bake in the preheated oven until cookies are firm and bottoms are golden brown, 18 to 20 minutes. Roll baked cookies in confectioners' sugar in the shallow bowl and place on prepared wire rack to cool.