Where has the decrease in total energy gone?
As gandalf61 has already pointed out, this question is ill-posed. Objects simply do not get into a bound orbit with each other unless they can eject that energy difference from the system. For astronomical bodies, that's usually other gas/particles/smaller bodies which get accelerated by the two bodies you are considering. The gas would get heated up by the stirring effect of the two bodies, and the particles/smaller bodies would usually get ejected from the vicinity. So, that's where the energy difference goes when two objects capture each other into orbit.
Since total energy is decreased, as per E=mc2 has the mass of the system decreased?
Yes. That mass was carried away by the smaller bodies which helped the two bodies get into orbit.
Tangent:
The earth-moon system did not form that way. Instead, the leading theory is that two protoplanets crashed into one another in a cataclysmic event. This collision was not heads-on, but rather with a significant offset. That offset brought a lot of angular momentum into the system, and allowed the debris to settle down into two distinct drops of lava. We know the bigger one as our home planet, and the smaller one as its moon.
After the event, the big lava drop was rotating extremely fast, and obviously prograde with the smaller lava drop's orbit. As such, the tidal forces subsequently slowed down earth's rotational speed to a little under 24h, and lifted the moon's orbit high up to where it is today. This transfer of angular momentum continues even today, moving the moon's orbit further out by about 38mm per year.