Burned Rubber Smell & Banging under hood

I would check the radiator fans first to see if they are hitting something or burning up. Typically they only run constantly with the ac on.

Next is the electric ac compressor. Run it and see if the noise is there.

I would not drive too much if a radiator fan is bad since it can try to run with high coolant temps, usually in traffic on very hot days.

If you do see the engine temperature light come on, shutdown as soon as it is safe. These cars love to blow head gaskets and don't need overheating to do it.

 

If it wasn’t a Prius, it sounds and smells like a fraying belt or frozen belt tensioner or both…

 

Keep an eye on the coolant level in the engine coolant reservoir. It’s the larger of two (pink) coolant reservoirs, at the passenger side fender in engine bay.

any gen 3 Prius or Prius v for sale, odds are good it’s got a failed head gasket, with symptoms possibly masked by stop-leak product in engine coolant.

was the “banging and thunking” during a cold-start, say in the morning?

 

Just open the hood. Start the car in Ready and immediately push the ev button to keep the engine off for a few minutes. Stand on the passenger side and observe under the hood as someone turns on the ac.

The radiator fans directly behind the radiator will come on and make a medium whirling air moving sound.

The ac compressor down low on the front passenger's side will come on as well and make a low motor running sound.

Both are normal and the ac in the cabin should be blowing cool and progressively colder air.

Any banging and clunks should be obvious as to their location.