Configuring sqlnet.ora and tnsnames.ora on the client side
The difference of oracle instant client and the oracle client installed by Oracle Universal Installer is in how they are installed. The Oracle universal installer maintains a registry which the instant client does not have or use. But the software components are the same independent of the method you use to install. If you use the jdbc oci driver then you use java to access the libraries of the Oracle OCI client which is the well known client that use all the clients that can use a tnsname.ora. These are sqlplus, ODBC program, C-Programs that use the Oracle Precompiler, ... Access with the OCI client can be configured with tnsnames.ora and sqlnet.ora and the well known environment variables (like ORACLE_HOME, ORACLE_SID, TNS_ADMIN,...). In java there is a new way to access the Oracle database by using the jdbc thin client. This is a client completely implemented in java that does not use the oracle OCI libraries but has implemented the necessary oracle net protocols in java to communicate with an Oracle database. This client cannot be influenced by tnsnames.ora, sqlnet.ora or the environment variables. It does not even need these files. It only needs an appropriate jar file that implements the thin client.

If you use the oci client for a program then  in the environment that starts this program the Oracle relevaant variables must be set. So if a program is started by a shell script this shell script should set and export the relevant variables. The directory stored in the  variable TNS_ADMIN is searchd for the tnsnames.ora and sqlnet.ora. If this variable is not set then other directories are searched for these files (or similar files). This depends on the operating system and of the value of ORACLE_HOME, if set. If no appropriate file is found default values are used.

DIAG_ADR_ENABLED=OFF determines if ADR-logging (available since 11.1)  is used or the traditional logging is used. If ADR-logging is not disabled the TRACE_DIRECTORY_CLIENT parameter will be ignored and the sqlnet trace files will be found somewhere in the diag-directories used by ADR-logging.