Either option works
The guiding principles you should use when interpreting the rules for spells are:
- Spells only do what they say they do
- D&D 5e uses the natural language meaning of language if it's not a defined game term
- Specific beats general
For this specific spell, the description of Raulothim's psychic lance states, that as an alternative targeting option :
[...] you can utter a creature's name. If the creature is within range, it becomes the spell’s target even if you can’t see it. [...]
So, for this spell, the utterance of a name is a special rule for targeting that overrides the general spell targeting rules (namely that if you know a creatures name and they are in range you can target them specifically if they are in range). As the spell doesn't state "true name" we cannot assume any such restriction on the targeting.
Thus we fall back on the natural language meaning of a creature's name (some set of words or sounds that a creature of thing is known, addressed or referred to). Importantly, a name should uniquely identify a creature or thing.
For example, if you wanted to target a white dragon called Toby, King of The North (true name: Jolzoriat) in your campaign, a user of this spell could target them using one of two - four names (depending on how permissive your DM is):
- King of the North
- Toby, King of the North
What you cannot do is try to target "the white dragon" if you cannot see it.
Now, once a creature has become a target, the next paragraph of the spell description says:
The target must make an Intelligence saving throw.
This saving throw determines how much the target of the spell (either seen or named) is affected by the spell (assuming they are in range). But either way, there is no attack roll.
As to whether or not the spell is overpowered as a result of this (slight) modification to the targeting rules...no. The targeting only applies in very specific edge cases:
- where you know one of the names that a specific creature is known by
- noting a specific creature's species/type/description are not its "name" under the natural language interpretation
- You are fighting them or intend to harm them
- They are hidden from you in some way