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First off, you know sqldev doesn't need any client? It comes with the 11g JDBC driver.
Second, did you try the Basic connection type?
I am using the OCI/Thick Driver selection and using TNS within my current environment of over 100 users.
Whilst upgrading the Instant Client to the latest version I noticed OSD 2.1 Patch 1 stopped working, hence my thread.
Which platform are you using? Linux or Windows?
The instant client version should be the same version with ide/jdbc/lib/ojdbc5.jar
Currently, the version of SQL Developer's ojdbc5.jar is 126.96.36.199.0
but your instant client version is 188.8.131.52
So you can manually replace the ojdbc5.jar in ide/jdbc/lib/ with 184.108.40.206
Copying the instantclient ojdbc5.jar file into sqldeveloper/jdbc/lib worked. Thanks!!!