"Can the interrupts be simulated with a simulator? If yes where can i find such an emulator?
"

You need a simulator or emulator finally? If it is the former then you can try the Pinnacle52.

Is your interrupt source, time based or event based ? If it is based on the simulated MCU clock, then, when running under windows dont expect any accurate timings... You can check out the logic and in my opinion at times it can be very useful to observe things in slow motion.

OK the above is based on my experience - maybe there are members who have tried simulators extensively. They can advise better.

Raghu