You need to replace VERSION with the output of the command "uname -r". It is /lib/modules/18.104.22.168-65.fc7/build for me.
You can go easily to that directory by typing "cd /lib/modules/`uname -r`/build" note the backward thingies!
That directory contains the modules of the kernel, ndiswrapper wants to put its kernel module in there so the kernel can load it.
If you still have problems try looking for ndiswrapper in the repository by using: "yum list *ndis*". You need to have the livna repository installed which you can find here: http://rpm.livna.org