I'm not familiar with Watcom. Based on a Google search, I'm guessing that you're referring to Open Watcom.

The primary two compiler's that I personally have heard of being used on Windows to compile Perl and Perl modules is Microsoft's Visual Studio and MinGW, but that's not to say other compilers couldn't be used.

Regardless of which compiler you choose to go with, it (and its utilities, like make) must be compatible with the compiler used to compile your Perl installation. You said that you were using ActiveState's ActivePerl. If you're using the 32-bit version, you should use the PPM utility to install MinGW and dmake from ActiveState's repository. Those are guaranteed to work. If you're using the 64-bit version, I think there may be a few more steps and other things to be concerned about.

If you want an alternative, here's my suggestions:

• Try using the PPM utility to install from ActiveState's repository, which someone else has suggested a few times. That method does not involve you needing a compiler on your system.
• Try Strawberry Perl, which comes with everything you need. They also have a portable version available.
• I personally haven't used it, but I've seen others recommend Citrus Perl.

By the way, is "MinGW64-4.5.4" the 64-bit version? If so, that may be another issue. In your OP stated that you're using "Win7 (x86)". Forgetting everything else, installing (or trying to install) any 64-bit application on a 32-bit OS isn't going to work.