In my bios, when i go to my video card (AGP) and select maximum memory, it only goes up to 256MB. Does that mean I can't use higher memory video cards? Can I change that to anything higher, or is that the max for my motherboard?
Yes, that would be the graphics aperture size, not max memory... It will only be used when your graphics card memory is running low, so think of it as an extension of your graphic memory, which will only be used when needed. One thing to keep in mind is that the bigger your graphic memory, the smaller the aperture size should be.
Some motherboards allow manual selection of amount of system RAM onboard graphics can use, if it offers only a max of 256MB then that's the limit. The other common setting is the AGP aperture setting....you said "my video card" so I assume you are refering to AGP aperture explained above by starams5 link. You can have a greater amount of RAM on your video card(s), no problem.