Problem Description:
The following issues occur with ArcGIS server10.1 ArcGIS Sde10
Cannot connect to database because the database client software failed to load. Be sure the
Database client software is installed and configured correctly.
Unable to connect to the database because the database client software cannot be loaded. Make sure that the database client software is installed and configured correctly.
Find out why:
The machine where ArcGIS Server is installed are missing the 64-bit client libraries for the specific DBMS to which the con Nection is being made.
The machine on which ArcGIS server is installed is missing a 64-bit client library for the specific DBMS that is connecting.
Workaround:
Install the 64-bit client libraries for the database on each of the ArcGIS Server machine in the site. It's important to remember the ArcGIS Server is a 64-bit application and requires a 64-bit database client, versus arcgi S Desktop which is a 32-bit application and requires a 32-bit database client. After installing the database client, open the Administrative Tools > Services dialog and restart the ArcGIS Server ser Vice So, the new database libraries and variable changes can be detected.
Install the 64-bit client library of the database on each ArcGIS server machine on the site. It is important to remember that ArcGIS server is a 64-bit application that requires a 64-bit database client, while the ArcGIS desktop is a 32-bit application that requires 32-bit database clients. After you install the database client, open the Administrative Tools > Services dialog box and restart the ArcGIS Server service so that new database libraries and variable changes can be detected.
Excerpt from: http://support.esri.com/cn/knowledgebase/techarticles/detail/40409
Cannot connect to database because the database client