Can't connect to Oracle using MSDAORA OLE DB provider

We had a hard drive failure on one of the development machines and had to reinstall everything from scratch. Now it cannot connect to Oracle.

We are using ADO and would like to use MSDAORA provider (we had problems with Oracle provider in the past)

We can connect using plain SQL*Net - sqlplus works just fine We can connect using Oracle provider
We cannot connect using ODBC (but we don't care) We cannot connect using MSDAORA provider The error message is: "Test Connection failed because of an error in initializing provider."
There is no other specifics given.

The version of ADO is 2.5 (have no idea how to uninstall it but installed 2.1. over it and it still didn't work)

It's obviously something with MSDAORA provider setup but what is it?

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