Energy is "lost" a few places on Newton's cradle:
-drag as the ***** move through the air
-friction between the string and the frame/string and the ball
-sound and heat from the impacts
-unless perfectly stationary, there is probably some translational movement of the cradle

There's probably more, but that's what immediately comes to mind as I look at the one on my desk.

 

Nice

 

You just wanted him to talk about resistance on *****.

 

Optimal lubrication point.

 

Sparked pretty animated conversations at work, but I finally hammered it out. See above, for anyone that still cares. lol