Does database connectivity with Oracle work using standard ADO.NET? This error is coming from ADO.NET, not NHibernate.
There are a couple of causes for this error. The obvious one is that you need Oracle Client 8.1.7 or greater installed. If you're using the Oracle-provided libraries, I believe you need the 9 client or later installed.
Furthermore, the Oracle Universal[ly hated] Installer messes up the permissions on the directory. You must make sure that the ASPNET user (or whatever user your process will be running under) has Read,List,Execute on the ORACLE_HOME, ORACLE_HOME/Network/Admin, and ORACLE_HOME/bin folders.
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