The chances are that you do not have the corect drivers installed and/ or you either have default vga settings in 16 colours.
Get as much info about your graphics card and visit thier website for the latest drivers. Download them (they sometimes come with the install program as well)and follow the instructions if there is an install program or change them using device manager.
There are lots of solved threads dealing with 16 or 256 colours if you need any more info. sometimes its quicker to reaearch these instead of waiting for someone to reply to a question.