The reason you can't get more than 16 colours is because you are probably using the standard windows vga graphics adapter.
I've looked on IBMs website, the onboard card you have is an nvidia. The link below will take you straight to the download page for the win2000 driver for this card :
If this doesn't work, go to nvidia's website & download the driver from there. The link below will take you directly to the page you need.
If you wish to install an off board card instead, you are right about having to disable the onboard one first. This will either be a setting in the Bios or a jumper on the motherboard.