I thought this may be very helpful for those of you using SQL7 linked server to Oracle 7.3.4 Database. After much research and no answers when opening a case with Microsoft I finally figured out how to delete using Openquery. There are a few missing pieces of information that would of been a great help in BOL. The first is, the Microsoft OLE DB for Oracle is not the correct choice for the data provier as one might think. The correct choice is the Oracle Provider for OLE DB. The next important thing is that the Oracle table you are querying MUST have a unique index on at least one column not necessarily the column in your WHERE clause. Thirdly, you get much better performance and use of indexes if you put the WHERE clause inside the OPENQUERY statement. Here is the syntax that I found to work in my application:

DECLARE @ins_id varchar(7)
DECLARE @sqlstring nvarchar(2000)
Select @ins_id = '123456'
Select @ins_id = convert(int, @ins_id)
select @ins_id

select @sqlstring = 'DELETE FROM OPENQUERY(LinkedServerName,"SELECT * FROM OracleTableName WHERE I_ID = '
+ '' + @ins_id + '' + '&#34'
select @sqlstring

EXEC sp_executesql @sqlstring

*Note...I had an additional data conversion from varchar to integer in my statement.

I hope this information helps any others who are having trouble performing this type of task.