WORKAROUND:
None.
STATUS:
Issue fixed in version 12.9. The latest version of Toad for Oracle can be downloaded at: https://support.quest.com/toad-for-oracle/download-new-releases
1) OS Authenticated user, "OPS$JD-ORCL12CR2N\ADMIN". To log in with this user, put in EXTERNAL and leave the password blank.
2) If a proxy user is added to the mix: Run this from the editor: ALTER USER SCOTT GRANT CONNECT THROUGH "OPS$JD-ORCL12CR2N\ADMIN".
3) You can now log in as SCOTT, through the external user, with [SCOTT] in the username field in Toad, and the password blank.
4) To go the other way with the proxy, that is with ALTER USER "OPS$JD-ORCL12CR2N\ADMIN" GRANT CONNECT THROUGH SCOTT , then put EXTERNAL[SCOTT] in the username field and leave password blank.