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I'm not familiar with TOAD, but I know there are compatibility issues. Check on the TOAD site, which TOAD versions support which Oracle versions.
Here's one more reason why this error occurs in Toad. It is when you have more than one Oracle Client installed on your machine. Even when you select the correct Oracle Home in "Connect Using" field of Toad, you still get this error "Can't initialize OCI. Error -1". So, to solve that you need to go to the installation folder of that Oracle Home (e.g. C:\Oracle\ora92\), then go to the BIN folder. Open Oracle.Key in Notepad and confirm that it is showing Registry entry/path to the correct Oracle Home (e.g. HOME0 or HOME1 or whatever).
I hope this helps.
This error may be seen on Vista or Windows 7 operating system. So, in order to solve the problem just start Toad by right clicking its shortcut on desktop and select "Run as administrator".