Your boss is correct. An engine dyno measures tq/hp at the flywheel - what the engine is capable of putting out. A chassis dyno, what you had your car on, measures how much of that gets to the ground. The losses are mostly frictional losses - parts rubbing on each other, the power necessary to move those parts through their lubricant and to move the lube itself. You experience it as trans/rear-end/tires getting hot. A manual trans has less frictional loss than an automatic (no auto trans fluid to pump inside a manual trans.) That's why manual trans cars are typically a little quicker than autos, all other things being equal.
