Installing the kernel sources doesn't mean your kernel is upgated. The sources are just that, the source code. After you've installed the sources, you need to go into the /usr/src/linux directory and make a new kernel.
This howevever isn't the issue, neither is that the sources supplied are old (redhat 7.3 comes with 2.4.18, so even if you compile those sources, you'll still be on that kernel version) and you will need to download the latest sources from the web, or get them of a mag cover disk.
The real issue is that, after intalling the sources you should be able to compile the modem drivers, without getting the error.
If you update the kernel, you'll probably still have to compile the modem drivers, in fact, almost definintly.