what chemicals generate heat when rubbed (w/ friction)on hard surface
in a paste form even in presence of water environment?

Greetings!
This might seem common, but you can get a simple exothermic reaction
when mixing standard 2-part epoxy materials together.  It is only
exothermic once you rub the materials together (it isn't exothermic if
they touch one another), it's in paste form, and it will generate heat
even in the presence of water.  This does, however, depend on what
kind of epoxy you obtain.

ONe such epoxy is Devcon's 5-minute 2 part epoxy.  You can find information here:

http://www.devcon.com/devconfamilyproduct.cfm?familyid=331

Any other 2-part expoxies will do, however.

I hope this helps - and at least you can create this demonstration
with materials you can find at the store.

-

Epoxy is not what I had in mind. It will not work. I have to mix this
in the product & it will be mixed,so it would have already mixed
together and will gell. So it will not be able to rub at later time.

A rather easy way to get a paste that will display exothermic
reactions with friction is to mix 10 parts calcium cloride(CaCl2) with
1 part water.  The calcium cloride is an active ingredient in many ice
melting salts.  You can obtain the Calcium Chloride in a 98% pure salt
form at www.hach.com.  The exothermic reaction is what makes it so
useful as a de-icer.  The friction of the cars driving over the salt
generates heat which in turn melts the ice.  Hope this is helpfull to
you!

Many super saturated solutions can be caused to crystallise by
vibration or friction on a suitable surface. The obvious one is sodium
thiosulphate which can be disolved in water to produce a super
saturated solution at high temp. You then cool it and it remains a
liquid. Suitable vibration or friction will cause the solution to
crystalise giving off the latent heat of crystallisation. This is
typically used in hand warming devices for walkers and ramblers. They
normally include a metal button that acts as the crystallisation
initiator. Hope this helps. By the way many other resin systems will
also produce heat when they crosslink i.e. like epoxy.