Your coworker is correct. Go to http://www.oracle.com and search for "Fail Safe" - this is oracle's WinNT/2K sollution exactly aimed for the "cheap and efficient" high availability requiremnets you are looking for.

Basicaly you will have to setup a cluster from two of your Win2K servers (clustering software provided by Microsoft) and on top of that you'll have to instal Oracle's Fail Safe (which BTW is free of charge). Then you will add your database and application server into cluser configuration, so that in case of one server failure the other one will take controll over all its clustered resources (including database instance and/or application server).

BTW, standby database configuration is primarily ment for "disaster recovery" purposes, which is not the same as "high availability" that you are looking for.