How much virtual memory can be address with 16 bit address bus?

You can address 2^20 (or 1,048,576) locations. Each location will consist of 16 bits (1 or 0) which is commonly called a Word (though that isn't always the case).

I think what you're really looking for is the answer in bytes. Each data bus line holds a bit, 8 bits is a byte, so you're data line is 2 bytes. Since each location holds two bytes, this would be 2,097,152 bytes, or 2MB