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It sounds like (as ORA-01031 says: insufficient privileges) sys has no sysdba privileges.
Try opening a SQL+ session as system and grant the sysdba role to user sys.
Maybe your problem is over then...
Hi there once more,
Of course it is possible that user system has the same problems as user sys (insufficient privs)....
In that case try to log on as internal/pwd@dbname as sysdba to perform the trick.
Thanks a lot, it helped me a lot
9i need a password file for remote login as sysdba. just create a password file and restart db