The motivation for this thesis was the need for further development of multibody dynamics simulation packages focused on detailed contact analysis. The thesis makes contributions in three different areas: Part I summarizes the equations, algorithms and design decisions necessary for dynamics simulation of flexible bodies with moving contacts. The assumed general shape function approach is presented. Additionally, the described technique enables studies of the residual stress release during grinding of flexible bodies. The proposed set of mode shapes was also successfully applied for modeling of heat flow. Part II is motivated by the need to reduce the computation time. The availability of the new cost-efficient multiprocessor computers triggered the development of the presented hybrid parallelization framework. The framework is designed to be easily portable and can be implemented without any system level coding or compiler modifications. Part III is motivated by the need for inter-operation with other simulation tools. A co-simulation framework based on the Transmission Line Modeling (TLM) technology was developed. The framework enables integration of several different simulation components into a single time-domain simulation. The framework has been used for connecting MSC.ADAMS and SKF BEAST simulation models. Throughout the thesis the approach was to present a practitioner roadmap. The detailed description of the theoretical results relevant for a real software implementation is put in focus. The software design decisions are discussed and the results of real industrial simulations are presented. This work has been supported by SKF, SSF/ProViking, ECSEL, KK-stiftelsen.