The growth of Pb film on Si(111) is an unusual metal-semiconductor system. For a certain temperature range, Pb films have been found to grow in steep-edge and flat-top islands with uniform height on Si(111). This specific film morphology has been correlated to Quantum Size Effect (QSE) that the object size or film thickness affects the electronic structure of the films and results in certain thicknesses more stable than others. The X-ray diffraction technique has the advantages of long penetration length and high statistics, therefore it has been used to investigate the influence of QSE on the growth of Pb on the Si(111) 7x7 surface. It is demonstrated that the structure of Pb islands and the associated wetting layer are consistent with effects of quantum confinement. Specular reflectivity of 3 monolayer (ML) Pb films grown on the substrate at 227K has conclusively shown that the Pb islands do not reside on top of a Pb wetting layer, but directly on top of the Si substrate. The nucleating Pb nanocrystals transform the highly disordered Pb wetting layer beneath the islands into well-ordered fcc Pb. The surface then consists of fcc Pb islands directly on top of the Si surface with the disordered wetting layer between the islands. Moreover, it is found that QSE leads to novel behavior for the coarsening evolution of the Pb islands. The diffuse X-ray scattering experiments have been carried out as functions of temperature, deposition rate and coverage. A structural evolution of Pb islands was observed after deposition at very low coverages (0.2 -- 1.0 ML above the wetting layer coverage). Contrary to the classical scaling theory of nucleation and Ostwald ripening, a much lower island density is achieved with coarsening after deposition at high rather than low flux rates. The time constants of coarsening are found to be orders of magnitudes shorter than what is expected from the Gibbs-Thompson analysis. The rapid evaporation of unstable 3-layer islands shown in complementary STM suggests the role of QSE in the more efficient decay mechanism operating at low temperatures. These results have important applications for the controlled growth of nanostructures.