Reciprocating machinery, e.g., diesel engines and reciprocating compressors, is the key power component in petroleum, petrochemical, nuclear power, and shipbuilding industries. Vibration signals have the characteristics of multi-source strong shock coupling and strong noise interference owing to the complex structure of reciprocating machinery; therefore, it is difficult to extract, analyze, and diagnose mechanical fault features. Moreover, failures occur frequently every year, causing serious economic losses. To accurately and efficiently extract sensitive features from the strong noise interference and unsteady monitoring signals of reciprocating machinery, a study on the time-frequency feature extraction method of multi-source shock signals was conducted. Combining the characteristics of reciprocating mechanical vibration signals, a targeted optimization method considering the variational modal decomposition (VMD) mode number K and second penalty factor was proposed, which completed the adaptive decomposition of coupled signals. Aiming at the bilateral asymmetric attenuation characteristics of reciprocating mechanical shock signals, a new bilateral adaptive Laplace wavelet (BALW) was established. A search strategy for wavelet local parameters of multi-impact signals was proposed using the harmony search (HS) method. A multi-source shock simulation signal was established and actual data of the valve fault were obtained through diesel engine fault experiments. The test results demonstrated that the new method achieved adaptive extraction of local shock features of non-stationary multi-source shock signals and was superior to the original method in terms of signal decomposition effect, sensitive feature extraction, fault recognition accuracy, and parameter search time. The fault recognition rate of the intake and exhaust valve clearance was above 90% and the extraction accuracy of the shock start position was improved by 10°.