If you only have the choice of 256 or 16 colors, then the video driver is not installed or faulty. Re-installing the correct video drivers might resolve both issues.
As well as starcraftmaster's request as to what .DLL is shown as missing, what brand and model is the computer, if it's a brandname, or what video does it use if it's a generic system?
If the system/video card is unknown, you can use a system analysis utility such as Everest Home
to identify the video and let us know so we can source a suitable video driver.