SP2-0750: You may need to set ORACLE_HOME
I restarted my PC and tried setting ORACLE HOME from Command Prompt as SET ORACLE_HOME=... and it worked

Further more, i did following two things

1-ORACLE_HOME should not contain anything after the path i.e. no \, ;,,

2-I added an environment variable named LANG with value American_America.we8iso8859p15