It might make sense to distribute denyhosts with a "allowed-hosts" file. In that file you might include the loopback address. This would serve the dual purpose of providing a quick example for users of how to use the allowed-hosts file and prevent them from accidentally locking themselves out of their own machine.
I agree !
I had to this post that even you delete the 127.0.0.1 entry in hosts.deny,
the purge process add it automatically when purging.
The only way to do is to delete all entries in files in denyhosts/data/ before
to remore 127.0.0.1 in hosts.deny.
Please do something ! denyhosts should not treat the loopback !!!
I'm not sure how long I've been using DH, or how long it has existed for that matter, but this problem doesn't exist for me and it doesn't exist for many, many other users. Respectfully suggest that this is a misconfigured setup. Please post your problem to the mailing list so that it can be addressed.