Preheat oven to 350. Lightly grease 2 9-inch round cake pans. In large bowl combine cake mix and jello. Add pureed strawberries, eggs, oil and water; beat at medium speed until smooth. Pour into pans and bake for 20 minutes. Let cool in pans for 10 minutes, then transfer to wire cooling racks.
In a large bowl, beat butter and cream cheese until creamy. Beat in 1/4 cup of strawberry puree and strawberry extract. Gradually add confectioners sugar, beating until smooth. Spread frosting in between layers and on top and sides of cake. Garnish with fresh strawberries.