The point of the line is that you can't physically eat it and still have it. If you can explain to me what enjoyment you have out of having a piece of cake you can't eat maybe well go with your interpretation
Furthermore, according to your understanding, shouldn't it simply say "you can have your cake but you can't eat it"?
So I'm going with Ergel on this one, though I always heard the line as have your cake and eat it too