What is difference between assembler and linker?

There is no definite term "assembler" in compilation process. It is more like "compiler" and "linker".

Assembler usually refers to a compiler of machine language: http://en.wikipedia.org/wiki/Assembly_language

So you probably mean difference between compiler and linker?

Lets say you have a 3 module program, and it uses a 3rd party library, then the compiler will just compile each of your modules (separately) into binary pieces, which have "unclosed" references to abovementioned library and other 2 modules. After u have 3 binary pieces comes in "linker" it attaches those "unclosed" (or unlinked) links to other modules and library, therefore giving you working program file (.exe file for example).

Really hard to say that without a schema or something like that:) Hope this answer helped you.