Vivek,
Yes you can use S-functions with Simulation Interface Toolkit.
Since you will be connecting inputs and outputs of your model to signals from your robot you will want the interaction to be deterministic and the simulation to run in real-time. This means you will be running your model on LabVIEW Real-Time (RT). In most cases if your code will run in Windows it will run under LabVIEW RT, however some functions may not be supported. If you are using simple C code it should not be any problem. If you are including external libraries you will want to check that the code will run. The best way to do that is to either generate the model DLL using Simulation Interface Toolkit (SIT) and check it using the DLL Checker for your version of LabVIEW that is attached to this Knowledgebase:
http://digital.ni.com/public.nsf/websearch/0BF52E6FAC0BF9C286256EDB00015230?OpenDocument
If you don't have SIT yet, you can test the code by building a standard dll that uses the same code as what is in the S function and then testing that dll.
Carl L
National Instruments