By the "noncompact $U(1)$ group", we mean a group that is isomorphic to $({\mathbb R},+)$. In other words, the elements of $U(1)$ are formally $\exp(i\phi)$ but the identification $\phi\sim \phi+2\pi k$ isn't imposed. When it's not imposed, it also means that the dual variable ("momentum") to $\phi$, the charge, isn't quantized. One may allow fields with arbitrary continuous charges $Q$ that transform by the factor $\exp(iQ\phi)$.

It's still legitimate to call this a version of a $U(1)$ group because the Lie algebra of the group is still the same, ${\mathfrak u}(1)$.

In the second part of the question, where I am not 100% sure what you don't understand about the quote, you probably want to explain why compactness is related to quantization? It's because the charge $Q$ is what determines how the phase $\phi$ of a complex field is changing under gauge transformations. If we say that the gauge transformation multiplying fields by $\exp(iQ\phi)$ is equivalent for $\phi$ and $\phi+2\pi$, it's equivalent to saying that $Q$ is integer-valued because the identity $\exp(iQ\phi)=\exp(iQ(\phi+2\pi))$ holds iff $Q\in{\mathbb Z}$. It's the same logic as the quantization of momentum on compact spaces or angular momentum from wave functions that depend on the spherical coordinates.

He is explaining that the embedding of the $Q$ into a non-Abelian group pretty much implies that $Q$ is embedded into an $SU(2)$ group inside the non-Abelian group, and then the $Q$ is quantized for the same mathematical reason why $J_z$ is quantized. I would only repeat his explanation because it seems utterly complete and comprehensible to me.

Note that the quantization of $Q$ holds even if the $SU(2)$ is spontaneously broken to a $U(1)$. After all, we see such a thing in the electroweak theory. The group theory still works for the spontaneously broken $SU(2)$ group.

This post imported from StackExchange Physics at 2014-03-22 17:13 (UCT), posted by SE-user Luboš Motl