Strange Oracle connection problem

[jmb]

We are running 64-bit 11.00. We have 64 bit Oracle (8.1.7) installed, along with both 32 and 64 bit clients. If the users try to connect to the 64-bit database, using sqlplus with the 32-bit client, and use an incorrect password, the disk thrashes for about 30 minutes. With a correct password, there's no problem. With the 64-bit client, and both good and bad passwords, there is no problem.
We only have 640 mb RAM, and swap space is generally not an issue, but swap use and disk access for the root drive jump immensly when this happens, which makes the system almost unusable for a while. Oracle is not installed on the root disk, and there is no other swap than what is on the root disk, 976 MB. There are no other login/password or slowdown issues. Any ideas