My Uncle gave me his laptop, and it worked well for a while,m then it started to mess up and I reformated it. I put the same OS and all on there.. But now It's stuck in 640x480 resolution in 16bit color

How do I fix this?

Actually 16 bit colour is pretty good - but you likely mean 16 colour (4 bit).

Any luck changing the settings through control panel?

If the highest setting available there is 16 colour, that's basic vga and you'll need to determine and install the correct video drivers.

If you don't know the make & model of your video chipset, you could try checking the manufacturer's specs for your laptop online.

Might be able to determine the info using Aida32

Yes - your system is running under default video drivers following your format ie those that come packaged with Win 98. To revert to your previous display options you will need to update/reinstall the drivers for the card in the machine. Aida32 or Belarc will both provide the info on the video/graphics card and then, if you have not got the original driver disk, you will have to download the up-to-date drivers from the manufacturer's web site.

Also you can try going into start/run/advance tab/make sure the vga16 color box is not checked