And there are plenty of fossils of these sorts. The earth is NOT a closed system - see the difference. A closed system refers to something where nothing comes in or goes out. Again, life on earth is subject to an open system. It gets energy from the sun.
Natural selection is perfectly capable of design.
It didn't happen by chance. Yes, many times. Experiments have been done with fruit flies where one species of fruit fly is broken up into two populations and after a period of time the two populations are re-introduced and unable to reproduce together. In fact, find me one bebeficial mutation in Nature. In Africa, malaria is a devastating disease that kills many people.