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In order to proper working of denyhosts
1. edit your /etc/hosts.allow file and add:
sshd : /etc/hosts.deniedssh : deny
sshd : ALL : allow
2. issue the following command if /etc/hosts.deniedssh does not exist yet
touch /etc/hosts.deniedssh 
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Warning:

syslogd should ideally be run with the -c option; this will ensure that
denyhosts notices multiple repeated login attempts.

To do this, add syslogd_flags="-c" to /etc/rc.conf
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