Where is pl/slq developer picking up tnsnames.ora

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will contain the details of TNS names files like below

TNS File
  C:\OraHome\Network\Admin\tnsnames.ora

See this post:
http://www.orafaq.com/forum/t/100104/2/

Take a look at your HKEY_LOCAL_MACHINE\SOFTWARE\ORACLE\inst_loc setting and make sure it points to the right place.

The individual home directories you have set up will have sub-keys under there, make sure they exist and are correct as well.

Example registry settings from my system running PL/SQL:
 

SOFTWARE\ORACLE
  inst_loc = C:\Program Files\Oracle\Inventory

  SOFTWARE\ORACLE\KEY_OraClient10g_home1
    ORACLE_HOME = C:\Oracle\product\10.1.0\Client_1
    ORACLE_HOME_NAME = OraClient10g_home1
    ORACLE_GROUP_NAME = Oracle - OraClient10g_home1
    ORACLE_BUNDLE_NAME = Enterprise
    NLS_LANG = AMERICAN_AMERICA.WE8MSWIN1252
    ORACLE_HOME_KEY = SOFTWARE\ORACLE\KEY_OraClient10g_home1

    SOFTWARE\ORACLE\KEY_OraClient10g_home1\ODP.NET
      TraceFileName = C:\ODPNET.trc
      TraceLevel = 0
      TraceOption = 0
      StatementCacheSize = 0

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sqldeveloper shows oracle homes this way:
Homes
  ORACLE10GODBC  (C:\Program Files\ORACLE10GODBC)
  OraClient10g_home1  (C:\oracle\product\10.2.0\client_1)

I have tnsnames in:
C:\oracle\product\10.2.0\client_1\NETWORK\ADMIN\TNSNAMES.ora

still pl/sql developer is not picking up the file.

I want pl/sql developer to pick up TNSNAMES.ora from 11.1 instantclient:
C:\oracle\instantclient_11_1\TNSNAMES.ora

how do i do this

There obviously isn't an Oracle Home se tup for your 11.1 instant client.  You'll need to set that up.  There are instructions on how to do that here (scroll to the bottom):
http://download.oracle.com/docs/cd/B10500_01/em.920/a96697/moh.htm

I am getting access denied in this path as the folder is write protected, and any attempt to change folder from readonly results in error

C:\Program Files\ORACLE10GODBC\NETWORK\ADMIN

new setting in tools->preferences
oracle home:C:\oracle\instantclient_11_1
oci library: C:\oracle\instantclient_11_1\oci.dll

however still i am getting error, however seems at least it is oracle error:
could not resolve the connect identifier specified

which version of windows you are usind? Do you have admin aCcess?

i don't have admin access to my pc, so can't install any software at will

all i want to know is when TNSNAMES.ora and oci.dll are present in C:\oracle\instantclient_11_1
and i have provided the explicit path to the toll, why isn't the tool picking them up

Try defining an environment variable TNS_ADMIN and set to the directory of your instant client. Don't tell me you can't do that either :(-

thanks newbie, but i don't need your help.

Well, I'm just speculating at this point, but usually the tnsnames.ora file would be located in C:\oracle\instantclient_11_1\network\admin\tnsnames.ora and not C:\oracle\instantclient_11_1.  If you have rights to create those directories, you might try moving it there.

apresence:
didn't work