What video card are you trying to use? And dont you have a driver disc for it? If not you will most certainly need to dl the win 98 drivers off of the makers website. Once dl'ed you will most likely just have to run the exe. of the driver to install it and then win 98 will recognize it and it will restart you you should be fine. What is happening right now is that win 98 has installed standard vga drivers for your vid card and you are probably stuck on 8 color and 640X480 resolution.
1) you have the wrong monitor drivers installed
2) you have the correct monitor drivers installed - i had a samsung that wouldnt let me change resolutions when its drivers where installed.
3) your graphics card drivers are fudged. try re-installing
my vote is for monitor/display driver problems. try uninstall and reinstall display drivers and check that your monitor is using correct driver, sometimes plug and play monitor drivers may cause these problems.