I might be too late in replying, but I'll take a stab at your questions:
1. My mb manual states that my board does not support x16 modules (I do not think they are referring to the # of chips on the module). What does that x16 mean?
I believe when your manual is referring to x16, they are referring to the chip configuration. For memory there are many different configurations. The two most common configurations are x8 and/or x16. There are many ways to build a 128MB module. For example you can use 4 chips of (16Mx16) configuration, or you can also use 8 chips of (16Mx8). Many motherboards do not support x16- as x8 is a more popular configuration that has a longer history of use in systems.
2. Also if a module has 16 chips (8 on each side-double sided), will it take up 2 banks on the mb?
To answer your question, each memory module occupies 1 slot on your motherboard, regardless of the memory modules configuration. Furthermore, I would like to clarify that the mb (motherboard) banks/slots are not directly related to the banks on a memory module.
Usually, a memory module with 16 chips has two memory-banks, 8 chips one memory-bank, 4 chips also one memory-bank. On a memory module there is no such thing as 1/2 a bank or 3 banks; a memory module configuration that occupies half of a bank, in actuality takes up an entire bank.
examples:
128MB, total memory:16Mx64 configured as: (16Mx16,4chip) = 1 bank, 1/2 of a single side
128MB, total memory:16Mx64 configured as: (8Mx16,8chip) = 1 bank , single sided
128MB, total memory:16Mx64 configured as: (16Mx8,8chip) = 1 bank, single sided
128MB, total memory:16Mx64 configured as: (8Mx8,16chip) = 2 bank, double sided
A bank on a memory module can hold a total of 9 chips. (the extra odd chip for buffered configurations such as ECC or REGISTERED modules)
Hope this helps! =)