I have installed Oracle 8.1.6 on the same home of 8.1.5 earlier on Windows 2000 Server and Advanced Server with no problems at all , it is fully compatible with Windows 2000.

Also Avoid installing client software on the same home of Oracle Server , Install client Software on Separated home if needed on the same Oracle Box.

Just try to reinstall Oracle parts via Universal Installer , just remove the check mark and then re-install Oracle Engine itself.

It seems that You have a faulty or lost dll file no more.