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I have created a formula field on the custom object. I tried to create this formula:

AND(ISCHANGED(Final_Result__c ), ISPICKVAL(Lead_Status__c, "Admitted"))

where lead status is another formula field I created. The above gave me the error:

Error: Incorrect parameter type for function 'ISPICKVAL()'. Expected Picklist, received Text

How can this be rectified?

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You can check equality with a single equals sign (=). For text formulas, this operator should suffice:

Lead_Status__c = "Admitted"

The double equals sign (==) will also work, and some may prefer that stylistically although I do not. From Formula Operators and Functions:

Operator
= and == (Equal)

Description
Evaluates if two values are equivalent. The = and == operator are interchangeable.

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