$x^2 + y^2 -2x - 5y + 16 = 0$
So I went like this: $$x^2 - 2x + 1 - 1 + y^2 - 5y + \frac{25}{4} - \frac{25}{4} = - 16 \\ (x-1)^2 + (y-\frac{5}{2})^2 = -\frac{64}{4} + \frac{25}{4} + \frac{4}{4}$$
I think you can see where i'm going with this...
$x^2 + y^2 -2x - 5y + 16 = 0$
So I went like this: $$x^2 - 2x + 1 - 1 + y^2 - 5y + \frac{25}{4} - \frac{25}{4} = - 16 \\ (x-1)^2 + (y-\frac{5}{2})^2 = -\frac{64}{4} + \frac{25}{4} + \frac{4}{4}$$
I think you can see where i'm going with this...
The two steps of calculation you made are both correct. Now it's time to review what you made.
You have proven that there exists no pair of real values $(x,y)$ that satisfies the equation. Therefore, the equation is not an equation of a circle.