Build dynamic string SPD workflow activity in Sharepoint 2007 is no more directly available in SharePoint 2010. In order to activate you need to do the following activities.
Step 1: Navigate to \Program Files\Common Files\Microsoft Shared\web server extensions\14\TEMPLATE\1033\Workflow on your system drive
Step 2: Open the WSS.Actions file (this is where information about all default SPD actions is stored)
Step 3: Find "Build Dynamic String" and change the "AppliesTo" parameter from "DisplayOnly" to "all". Save the file
Step 4: Run IISReset, re-open SPD - you should now have the Build Dynamic String action available.