It's illuminating to consider the center of masses of each of these objects.
For each object:
[itex]KE_{object} = KE_{CM} + KE_{internal}[/itex]
As you say, the total kinetic energy of a pair of objects is conserved in a collision, though energy may be transferred between the center-of-mass degree of freedom, and internal degrees of freedom.
As for as momentum goes, the total linear momentum of an object can be expressed just as the momentum of its center of mass. So no linear momentum is lost to internal degrees of freedom in a collision.
However, angular momentum breaks up into (orbital) angular momentum of the center of mass, and (spin) angular momentum with respect to the center of mass:
[itex]L_{total}=L_{CM} + L_{internal}[/itex]
So in a collision, the total angular momentum is conserved, though some may be transferred to internal angular momentum. The objects could glance off each other, and be spinning as a result.