That '-i' syntax is for a Direct Connect connection; Direct Connect success indicates that your
application server (giomgr daemon, started by 'sdemon -o start') is configured incorrectly.
There isn't a whole lot of documentation on connections because there's not a lot of variation
possible. All commands (and the two APIs) take five parameters (server, instance, database,
user, password). The database parameter is mostly unused, since modern ArcSDE instances
are either linked to a single database or the RDBMS doesn't have them (Oracle). The only
real variation is for Direct Connect, where the server is ignored, the instance changes to a
RDBMS-specific colon-delimited list (starting with "sde") and the password may require extra
parameters (on Oracle).
At this point I'd urge you to contact Tech Support; they can help you with establishing the
correct parameters in $SDEHOME/etc/dbinit.sde so that this error is not generated.
- V