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Sounds like the application is running in 32 bit mode, and so it can't use the 64 bit Oracle client. If you put a 32 bit Oracle client on the machine it might start working. Alternately, recompile the application for AnyCPU. You might run into issues referencing Oracle 10 while using 11 though, I found some code didn't like that situation (fixed by changing the reference to the Oracle 11 client and recompiling).
You should always have Copy Local off Oracle.DataAccess.dll unless you have a reason not to. This case isn't a reason, as without the appropriate Oracle client installed on the computer the DLL doesn't work anyway.
Another alternative solution is to wait until the new managed client comes out (soon apparently) and use that. That's just a DLL included in the project (with Copy Local on) and no Oracle client install required. It should work perfectly in this situation.