Why does incomplete combustion occur?
Because while carbon can be incompletely oxidized, the oxidation is still thermodynamically downhill.
Insufficient oxygen, an improperly stacked fire, a poorly designed furnace; all of which can limit egress of oxygen to the centre of the pile of fuel. Note that sometimes you want incomplete combustion, and wood is burnt under conditions that promote formation of charcoal. (Why do want charcoal? Well, you need it for your barbecue; also (and unfacetiously) blacksmiths and metallurgists would have needed it to make and work iron and steel.)
A typical diesel fuel,
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