Ni$_{80}$Fe$_{20}$ (Py) and Py-Cu exhibit intriguing ultrafast demagnetization behavior, where the Ni magnetic moment shows a delayed response relative to the Fe [S. Mathias et al., PNAS {bf 109}, 4792 (2012)]. To unravel the mechanism responsible for this behavior, we have studied Py-Cu alloys for a wide range of Cu concentrations using X-ray magnetic circular dichroism (XMCD). The magnetic moments of Fe and Ni are found to respond very differently to Cu alloying: Fe becomes a strong ferromagnet in Py, with the magnetic moment largely unaffected by Cu alloying. In contrast, the Ni magnetic moment decreases continuously with increasing Cu concentration. Our results are corroborated by ab-initio calculations of the electronic structure, which we discuss in the framework of virtual bound states (VBSs). For high Cu concentrations, Ni exhibits VBSs below the Fermi level, which are likely responsible for an increased orbital/spin magnetic ratio at high Cu concentrations. Fe exhibits VBSs in the minority band, approximately 1 eV above the Fermi level in pure Py, that move closer to the Fermi level upon Cu alloying. A strong interaction between the VBSs and excited electrons above the Fermi level enhances the formation of localized magnons at Fe sites, which explains the different behavior between Fe and Ni during ultrafast demagnetization.
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