A PhD in engineering isn't likely to be as competitive as PhDs in many other fields, because a lot of "top" students want to move into industry after completion of their degrees as opposed to continuing with their studies. So don't write yourself off for the PhD on account of having a somewhat bad year. If you performed well in the relevant modules, and are known to the staff who run the doctorate programme that you fancy, then give it a shot and apply.
After your PhD, you'll be eligible for specific, usually more technical positions, industry. I think most of the FE analysts at my work have PhDs, for example. You can also apply for the usual positions, even if your PhD won't confer an advantage. Having a PhD isn't career limiting... it's just that it's not the best option if what you know you want to do doesn't require it. But if you're interested in a field where much of the work seems to come from academia, then a PhD could turn out to be quite useful.
In terms of jobs, once you graduate you should be applying for graduate/entry level/junior positions. You certainly don't need an internship to get a job, although it does help with the more competitive ones. There are probably a lot more jobs than internships each year, so lots of people must therefore be able to get jobs without internships. You have nothing to lose by applying to jobs that interest you, so go for it.