I've read in some sources that
Entropy is a measure of how much energy is not available to do work
but I'm not quite sure what this is getting at. The only thing that I could think of is perhaps that heat cannot be fully converted work in a cycle with a portion dumped out as entropy. Is my interpretation correct?
Entropy of a system is a measure of a part the internal energy that is not available for isothermal work. More specifically, the internal energy consists of several parts, thermal $TS$, volumetric $-pV$, chemical $\mu N$, electrical $\psi e$, gravitational $\phi m$, etc.: $U=TS - pV + \mu N + \psi e+ \phi m+...$. In an isothermal process the work done is not from the thermal energy $TS$ but from the rest. This is in complete analogy with the other internal energy terms, such as, say, gravitational, since $\phi = gh$, and if the height $h$ of the mass does not change then it does no work, see, any hydro-electric generators. Or if the potential $\psi$ of the electric charge $e$ does not change then its potential energy does no work. If you do not change the temperature of the entropy it does no work.
