Using surface X-ray diffraction and atomic scale simulations we have studied the structure of Co films deposited on Pd(001) at room temperature by thermal (TD) and pulsed laser deposition (PLD). While for TD we find epitaxial growth without sizable amount of intermixing, for PLD films substantial alloying is observed. Ab initio calculations indicate an oscillatory Co-Co interaction in the Pd layers, which is repulsive for nearest neighbors and attractive for next-nearest neighbors.