I want to compile and later modify a Linux kernel code but I cannot do it by installing and running separate Linux system like Ubuntu and then compiling this kernel on linux system as I am not able to work on full fledged Linux system(Laptop hardware problems).I want to do it on Windows 7.Is there a way that I can do it?

You have many choices.

One is to install or use some virtual machine. Qemu can be run with limited user rights. I'd suggest this method. Get something like virtualbox or vmplayer and use both windows 7 and linux at the same time.

Another is to run a live cd/usb/dvd if you have enough resources.

Easy to make a real usb install if you are careful. The entire distro could be installed and booted from a usb flash or usb hard drive.

It might be possible to use colinux.

What I would do is to buy a copy of VMWare or its equivalent, and an external USB 2.0 or Firewire hard-disk drive. Set up a virtual machine that is hosted entirely on that external drive (or a partition thereof), leaving the Windows host entirely alone. Run a Linux distro of your choice there.

Remember, all Intel/AMD chips of recent vintage have hardware support for virtualization, so it is extremely efficient. Most hosts on the Internet are, in fact, virtual machines. Operating systems also generally know when they are running in a virtual machine, and behave in a way that is favorable to that environment.