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This issue is addressed in ArcSDE 9.1 Service Pack 1 (SP1).
ArcSDE 9.1 is not supported with Oracle 10g R2. There is a known issue that prohibits it from connecting to Oracle 10g R2 databases.
A fix included in ArcSDE 9.1 Service Pack 1 will allow the connection. Download the pack using the link in Related Information, below.