Does all the chemical energy make it to mechanical energy?

The answer is No

Where does the other energy go?

most is lost in the form of heat to the surroundings which include the engine, the air, and anything in contact with those materials for heat spontaneously flows from a warmer to a cooler object. Engines exist to convert thermal to mechanical energy as well. 

We will not go to into depth on how to make an engine more effecient because they are designed for maximum effeciency with other economical factors included. And different parts, and materials are better depending on what the engine should be used for.