Am I able to use my FCP 7 to export mov files which then I will upload to compressor 4?
Yes. Or you can continue to use C3.5, which is what I typically do. There's not a lot of difference between C4 and C3.5. Is there some capability you're looking for specifically?
Also I heard that if you have FCP7 the compressor 4 when downloaded stops it working. Is this true?
No. it's not true. If you follow Apple's installation recommendations, all the apps will co-exist nicely.