We investigated structural, electronic, and magnetic properties of Co adsorbed on highly oriented pyrolytic graphite (HOPG). Distribution and atomic sites of 3 d transition-metal Co nanoislands and adatoms on HOPG were experimentally investigated by scanning tunneling microscopy with atomic resolution. In the very low thickness regime (≤0.6 Å), a strong nucleation mechanism and a preferred Co nanoisland diameter of ∼3.4 nm have been observed. Co adatoms were found to preferentially occupy β sites of the HOPG surface graphene layer and the atoms aggregated by further occupation of either α or overbond sites. This is in contrast to predictions based on density functional theory, which indicates that the hollow sites are the most energetically stable sites for Co adsorption. The presence of surface hydrocarbon contamination on graphite might be one possible cause of the observed active nucleation and stabilized nanoisland diameter of Co. The formation of Co carbide was evidenced by x-ray absorption spectroscopy. More importantly, the Co magnetic spin moment at the interface of Fe-capped ferromagnetic Co nanostructures and graphite, as determined by x-ray magnetic circular dichroism and sum-rule analysis, was found to be only 63% of the bulk value, implying a magnetically defective spin contact for carbon spintronics applications.