I have an old application built on Delphi 7 which has a large number of Custom 3rd party components. I need to migrate it to XE2. I have the .dcu files of the custom components and for some components I have source too.
Is there any way to include those .dcu files in my Delphi XE2 code.
You cannot use .dcu files from one version of Delphi in a different version. You need to re-compile from source.
However, that's much easier said than done. Because of the Unicode changes introduced in Delphi 2009 your components will almost surely not work when re-compiled in the latest version of Delphi. You'll need to get updated source for all the components. What's more you'll need to update your code too.
The starting point is Marco Cantù's white paper on Unicode.