Without knowing what Ludwik is driving at, a person can read into his
question anything they want. At face value he seems to be asking if
the KE of the block gets spread out among all the atoms of the iron so
that it shows up as an increase in their ave KE or does some of it go
somewhere else. The answer is "it depends". Usually, some energy goes
into permanent deformation (a change in potential energy of the atoms)
in the form of scratches etc. on the blocks involved. However, as Al
Clark suggests, the experiment can be refined to the point where "almost
all" the energy goes into an increase of ave KE.