According to this step-by-step set of instructions from Livestrong, you can definitely make sweetened coconut from dried coconut.
Things You'll Need:
- 1/2 cup desiccated coconut
- 1 tbsp. powdered sugar
- 1 1/2 tsp. canola oil
- 2 tsp. water
Blend dried coconut and powdered sugar with a whisk in a medium-sized bowl until the mixture is uniform.
Combine the canola oil and water in a small bowl, stirring until the ingredients are well blended.
Pour the liquid ingredients over the sugared coconut. Stir them to thoroughly coat the coconut.
Let the mixture sit for 10 minutes, or until the coconut absorbs all the liquid. Stir the mixture once or twice to turn it over.
Use the moistened, sweetened coconut immediately for best results. Alternatively, place it in a plastic freezer bag for short-term
storage in the refrigerator or long-term storage in the freezer. While
sealing the bag, press out as much air as possible.
Tips and Warnings:
The vegetable oil moistens the coconut and helps the powdered sugar
adhere better. If desired, increase the amount of water in the recipe
to 4 tsp. and eliminate the oil. Likewise, substitute the canola oil
for safflower or sunflower oil. Don't use olive oil, however, as its
saltier flavor will mask or diminish the sugar's sweetness. The recipe
calls for a small amount of coconut because it's best to use homemade,
sweetened coconut as you make it. You can easily double or triple the
quantities of each ingredient to make larger batches. Sweetened,
shredded coconut will stay fresh for about a month in an airtight
container stored in a cool, dry place or the refrigerator.
If the instructions don't work out for you, I'd suggest re-hydrating your coconut in a bowl of room temp water, draining the water out of the bowl, blotting the coconut until damp, and then adding the sugar.