How can I execute code directly from memory in delphi?

Yes you can, and you need not loadlibrary to execute a code from memory - you need to allocate a memory using VirtualAlloc function with PAGE_EXECUTE flag set

Update: here is a quick and dirty demo of the code executed from memory for 32-bit Delphi - I only tested that it works:

type
  TIncMe = procedure(var I: Integer);

var
  IncMeProc: TIncMe;

procedure IncMe(var I: Integer);
begin
  Inc(I);
end;

procedure CopyIncMe;
var
  Size: LongWord;
  Tmp: Pointer;

begin
  Size:= LongWord(@CopyIncMe) - LongWord(@IncMe);
  Tmp:= VirtualAlloc(nil, Size, MEM_COMMIT or MEM_RESERVE, PAGE_EXECUTE_READWRITE);
  Move(Pointer(@IncMe)^, Tmp^, Size);
  IncMeProc:= Tmp;
end;

procedure TForm1.Button1Click(Sender: TObject);
var
  J: Integer;

begin
  J:= 0;
  CopyIncMe;
  while J < 10 do begin
    IncMeProc(J);
    ShowMessage(IntToStr(J));
  end;
  VirtualFree(@IncMeProc, 0, MEM_RELEASE);
end;

There's an article on delphi.about.com, that shows how to load a dll from a resource.

It first loads the resource into memory, and then loads the dll from the resource using Memory Module

Instead of a resource, you can use a database or whatever source you want to load the dll from. Once it is in a memory stream, you can use the following code to load and execute the dll functions, which looks very much like 'normal' code to invoke a dll:

var
  btMM: PBTMemoryModule;
begin
  btMM := BTMemoryLoadLibary(mp_DllData, m_DllDataSize);
  try
    if btMM = nil then Abort;
    @m_TestCallstd := BTMemoryGetProcAddress(btMM, 'TestCallstd');
    if @m_TestCallstd = nil then Abort;
    m_TestCallstd('This is a Dll Memory call!');
  except
    Showmessage('An error occoured while loading the dll: ' + BTMemoryGetLastError);
  end;
  if Assigned(btMM) then BTMemoryFreeLibrary(btMM);
end;