Win2003 server setting affecting remote display

I am connecting to a win2003 server standard edition via remote desktop. I have set the display setting to high color and 1024x768 resolution (in the remote desktop display tab).
When I am connected to the win2003 server via remote desktop, my display color setting is changed to medium (16 bit) and the Advanced tab is grayed out and cannot be changed.

My question is: Where in the server can I set the setting so it can support color quality specified in my remote desktop setting? I need to run application and it will not execute with a medium color setting. Appreciate any help.