Surface diffusion rates have been simulated using classical molecular dynamics in a model of CO adsorbed on Ni(111). This paper describes the energy distribution among adsorbate modes at the transition state, energy relaxation after crossing the transition state, and correlations among adsorbate modes near the transition state. The adsorbate bending (frustrated rotation) mode is strongly coupled to lateral translational motion. This molecular mode provides an important source of energy for reaching the transition state to diffusion, and an important frictional force that dissipates excess lateral translational energy. In this model, the molecular bending mode is a more important source (and sink) of lateral translational energy than the surface at short times. This result is interpreted as a consequence of directional bonding to the surface, and it should be generally important in surface diffusion of chemisorbed molecules.