I did not understand how to operate Houdini 16.5 with octane 4, my PATH is still set for Octane 3
PATH = "C:\Users\fabio\Documents\houdini16.5\bin;$PATH"
But do you have Octane installed in the Houdini $HOME folder? This is not a good idea at all ... now you are going to need to replace all the Octane 3 files with the Octane 4 ones, so you must be sure that nothing is mixed.
You should unzip the Octane plugin to a custom folder in your HD, let's say for example C:\Octane\Octane_3.08.2.0_Houdini_16.5.496_Win64 (if you are working with Octane 3.08.2 and Houdini 16.5.496) and configure the houdini.env variables to work with it:
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HOUDINI_DSO_ERROR = 2
PATH = "C:\Octane\Octane_3.08.2.0_Houdini_16.5.496_Win64\bin;$PATH"
HOUDINI_PATH = "C:\Octane\Octane_3.08.2.0_Houdini_16.5.496_Win64;&"
But to use this installation workflow you must delete all the files in your $HOME folder first to don't mix Octane versions.
Hope this helps,