To make the custard: In a medium saucepan or double boiler, add all dry ingredients. Over medium heat, add milk one cup at a time, stirring constantly until custard thickens and comes to a boil. Separate egg yolks from the whites. Refrigerate the whites for the meringue. In a small bowl, slightly beat egg yolks. Slowly add one cup of the hot custard to the egg yolks and whisk with a fork until well blended. Add egg yolk mixture to the custard and cook for about one minute longer. Remove from heat, add butter and vanilla, and 2 cups of the coconut. Mix well. Pour coconut custard into pie shell and set aside to cool.
Prepare meringue and drop in dollops on pie. Sprinkle with remaining ½ cup of coconut. Bake at 350°F until the meringue and the coconut are golden brown. Remove from heat. Cool completely. Refrigerate for several hours or overnight before serving.