How does kinetic energy change into different forms of energy? Is the kinetic energy the only thing that is generating heat when you rub your hands together? If so, exactly how does it do this? How does kinetic energy change forms? If not, what other energy forms are contributing to the heat being generated?
 A: Although there is kinetic energy when you are rubbing your hands together, it is largely irrelevant for the increase in thermal energy due to friction. First, work can be done at a constant KE simply by rubbing your hand at the same speed. Second, the KE can be made arbitrarily small for a fixed amount of thermal energy simply by making the normal force arbitrarily large. Third, the KE depends on the reference frame, but the thermal energy does not. 
What increases the thermal energy is the work done on the interface between your hands. The energy to do the work comes from chemical energy in your body. Energy generally changes form through some sort of work or through some sort of field. The details depend on each specific case. 
A: When you rub your hands together you are doing work. That work increases the average translational kinetic energy  (temperature) of your skin according to the work energy principal that states the work done on something equals the change in kinetic energy of that something, in this case, of your skin. Now the increase in temperature of the outer surface of the skin (epidermis) relative to the temperature of the internal temperature of the skin (dermis) results in heat transfer from the epidermis to the dermis. 
Hope this helps.
