lib.exe, Visual Studio, generating .lib files from dll's and def files
You are indeed going to need lib.exe to turn the .def file into a .lib file that the linker needs. It is stored in the vc\bin directory of the visual studio directory, C:\Program Files\Microsoft Visual Studio 10.0\VC\bin\lib.exe by default. The easiest way is to use the "Visual Studio Command Prompt", you'll find it in the Start menu, Microsoft Visual Studio 2010, Visual Studio Tools.
Next, run lib.exe with the /def:foo.def option to generate the .lib. Follow the vendor's instructions, if provided. And don't hesitate to contact them for support.
This does require a lot of work, and usually it's easier to google for the source and/or libs for the DLL's you need, as it's a good idea to compile both libraries and your program with the same compiler (Makes deployment easier, so you aren't dependant on multiple vc runtimes).
You can use this guide to create the .lib files: http://support.microsoft.com/kb/131313
It is a process that takes time, as well as a lot of debugging (Depending on the size of the dll's as well as the complexity of the dll's interfaces)
Depending on your platform, the location is usually:
Windows 7 32-bit with 32-bit VS2010:
C:\Program Files\Microsoft Visual Studio 10.0\VC\bin\
Windows 7 64-bit with 64-bit VS2010:
C:\Program Files\Microsoft Visual Studio 10.0\VC\bin`
Windows 7 64-bit with 32-bit VS2010:
C:\Program Files (x86)\Microsoft Visual Studio 10.0\VC\bin\
However, if you start the Visual Studio Command Prompt, it should be in your path. (Look under Visual Studio Tools on your start-menu)
If you go to the project properties for the DLL and check Linker -> Advanced, there is an entry for 'Import Library'. You might have to set that to generate a lib file while building the DLL or if it is already set it should point you at the location of the lib file.
That said if you build the whole project using Visual Studio 2010, adding the dependent libraries in the project's Common Properties' Reference section should automatically trigger the necessary link statements.