Driver's SQLAllocHandle on SQL_HANDLE_ENV error, but nothing fixes it

Unable to connect
SQLState=IM004
[Microsoft][ODBC Driver Manager] Driver's SQLAllocHandle on SQL_HANDLE_ENV
failed
That is the error I am receiving in ODBC manager when i try to test my connection. I can resolve it by giving the user local admin rights. This tells me it is obviously a permissions issue. Here is what I have tried and has failed:
1) I tried giving Authenticated Users Read, Read & Execute, applied to the WHOLE oracle home directory and restarted. Still has the same issue.
2) I checked the PATH and ORACLE_HOME environment variables and all are set right.
3) Using the universal installer's environment TAB I unchecked my only home hit apply, rechecked it, hit apply then rebooted. This resets the environment vairables and so forth.
4) Went to the BIN directory for Oracle and individually checked each DLL's security (took forever) and ensured I had rights.
5) I even tried giving EVERYONE read, read & execute as well.
6) Using FileMon and Regmon I looked for Access Denied or other errors when trying to test the connection. Nothing showed up.
This is a real problem because these users CAN NOT have local admin rights, so that is not an option. Anyone have any ideas?

I vaguely remember running into similar issue, can you folks try the following and reply back if this solved the problem so that I can make a note
SQLSetEnvAttr (henv, SQL_ATTR_ODBC_VERSION, (void *) SQL_OV_ODBC3, SQL_IS_INTEGER);

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