I think you can separate your question in two parts:
1) Why is the Carnot Efficiency the limit and can never be overcome?
The Carnot heat engine is an idealization that does not lose heat to the surroundings or work due to friction. You get the top Carnot efficiency considering that all the heat available when burning a combustion product is transformed into work. The Carnot theorem is a relation between the temperature of the “hot source” (the flame of the combustion) against the temperature of the “cold sink” (the environment where you are dumping the residuals from the process). In ideal conditions, the temperature of combustion of a particular fuel is fixed. On the other hand, you can put your engine in the most cold environment possible, let’s say somewhere near the north pole where you have the lowest temperatures on earth. This would give the best Carnot efficiency possible. Actually, the colder the surrounding environment, the better the efficiency of a heat engine, but here on Earth that has a limit. (Note: remember that to calculate the Carnot Efficiency the temperature has to be set on Kelvin, so no such thing as a “negative temperature” is possible).
In the real life however, not all the available temperature difference is transformed into energy. In a real heat engine many things happen to keep you away from the Carnot Efficiency, for example you cannot be sure of a perfect combustion; most of the heat released by the combustion is taken away in the refrigeration circuit; some work is lost in friction in the engine’s parts in movement, etc. So you can never beat the Carnot Efficiency which doesn’t take any of that into account.
2) does this apply to the energy from internal combustion to generate electricity via a electrical generator?
Here you are mixing to things. On one hand there is transformation of the chemical energy stored in the fuel into mechanical energy. For that, the engine releases the chemical energy in the form of heat, which then is used to generate work. As we have discussed the top efficiency for this process would be the Carnot Efficiency. On the other hand, you have the transformation of the already obtained mechanical energy into electrical energy through the generator. In this case the efficiencies are very high (up to 98% if I recall correctly).
To sum it up, the most important looses of efficiency occur in the process of getting the available chemical energy in the fuel and transform it into mechanical energy. After that, the mechanical/electrical transformation is very efficient.