'ORA-12537 TNS:connection closed' error appears after installing Toad 9.1 and connecting to a database.
This might occur is the database is Oracle 8.1.7 and client is 8.0.6
If it's not possible to upgrade database and client versions, as a workaround, enter the same connection parameters from the tnsnames.ora file into the "Direct" connection section in the Toad Connection Window. Then attempt to connect the the database.