Oracle 8.0.5 is not compatible with the Windows 2003 operating system. According to Oracle's Certification Matrix only Oracle 9.2 and newer releases are certified and supported on Windows 2003. I am not sure whether this problem you are encountering is because of this incompatibility, but I would definitely recommend going to a supported release of the Oracle database, preferably Oracle 10gR2. If the 8.0.5 database has been lost because the old server crashed, I would recommend installing Oracle 10gR2 for Windows 2003, create a new database and import your 8.0.5 database schemas into this new database (hopefully, you have a current export!).
Having said all this, ensure that the path specified for the control files in the init.ora file actually exists prior to attempting to create the database.
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