Make the dough: In a large bowl, stir together the yeast, 1 teaspoon of sugar, and the warm water. Let sit until foaming, about 5 minutes.

Meanwhile, whisk together 2 ½ cups of the flour, the remaining ⅓ cup of sugar, and the salt in a medium-size bowl.

Stir the egg into the yeast mixture. Add the flour mixture and gently stir until the dough begins to come together. Turn the dough out onto a floured surface and knead well, adding the softened butter pieces a few at a time, and adding up to ¼ cup more flour as needed, until you have a supple, slightly tacky dough, about 10 minutes. You might not need all of the flour. (The kneading can also be done in a stand mixer fitted with a dough hook, 5–7 minutes.) 

Grease a large bowl with the oil, add the dough, and turn to coat. Cover the bowl with a clean tea towel and let it sit in a warm place until nearly doubled in size, about 2 hours.

Meanwhile, make the filling: In a food processor, combine the raisins, walnuts, sugar, butter, and Mexican chocolate and pulse until smooth.

Generously grease a round, 10” Bundt pan with butter and set aside. Gently punch down the dough, turn out onto a lightly floured surface, and roll into a large, ¼-inch-thick rectangle.

Spread the filling onto the dough, leaving a ¼-inch border around the edges. Starting at one of the long sides of the rectangles, roll up the dough tightly like a jelly roll, around 16-17” long. Using a sharp knife, trim the ends off each roll and discard. Halve the roll lengthwise. You should now have 2 long strands of dough, with the layers of filling exposed.

Twist the strands together and pinch at the top and bottom to seal. Lay the twist into the Bundt pan, cover with a clean tea towel, and let rise until puffed, 1 hour.

Meanwhile, heat the oven to 350°F. To make the topping, stir together the sugar and cinnamon in a small bowl, and beat the egg with a splash of water in another small bowl. Brush a layer of the egg wash over the top of the babka (you will not use all of it), then sprinkle with the cinnamon sugar mixture.

Bake until golden brown and cooked through, 30–35 minutes.