This error basically means that the database name you are trying to connect to cannot be resolved.
How is the Oracle client and database set up regards name resolution. Are you using TNSNAMES.ORA or Oracle Names or some other mechanism.
Have you got SQL*Plus on the webserver box and if so can you connect to the database from it.
Regarding ODBC on Oracle 8.1.6 - this is very flakey on this version, I would advise you to avoid it or use a third party ODBS driver if you must use ODBC.
Regards,
Fes