Balancing the reaction is a great start! It gives you the mole ratios of each reactant and product. Now you need to calculate the expected amount of water from each reactant.
1.2 g butane x 1 mol butane/58 g butane x 10 mol water/2 mol butane x 18 g water/mol water = 1.86 g water
1.6 g oxygen x 1 mol oxygen/32 g oxygen x 10 mol water/13 mol oxygen x 18 g water/mol water = 0.692 g water
You will run out of oxygen before you run out of butane, so oxygen is the limiting reactant and you would expect to produce 0.692 g of water. Since you only produced 0.256 g, you then use that to calculate the percentage yield.
% yield = (0.256/0.692) x 100 = 36.99%
Using two significant figures gives 37% yield.