Database Client Versions
Failure to install and configure the SQL*Net client will prevent TOAD from functioning. However, you must also keep in mind the version of your client libraries versus the database that you're working with. Having client libraries from an older version of Oracle and working with newer versions of Oracle is a recipe for disaster. You may well encounter Oracle OCI API error messages from within TOAD. Such a problem might well occur as TOAD attempts to call an OCI function for some feature or capability of the newer database version that the older network client library does not support.
For example, using an 8i client with a 9i database and attempting to work with columns whose data type is XMLTYPE will yield the following cryptic message:
OCI-21500: internal error code, arguments: [kocgpn129], , , , , , , 
This is not a TOAD bug, nor is it a sign of lack of TOAD support for new database features; rather, it represents a simple user configuration error of trying to use an old and/or incompatible network client library version with a newer version of the Oracle database. The best advice is to always install and use the latest and greatest Oracle network client version, as it will always be fully backward compatible with prior database versions.
For the most current and authoritative reference on this issue, you should consult the Oracle metalink document 207303.1. At the time this book was written, the document recommended Oracle client versions 11.1 and 10.2, with version 9.2 being supported in some very limited and special scenarios.
We have found version incompatibility to be one of the most prevalent problems when people report a suspected TOAD bug. Because technical support will ask you this question upfront anyway, you might as well fix compatibility problems before the call and save yourself one step in the troubleshooting process.