Blank lines when executing "grep | xargs" in a "find -exec"

It's failing because when the grep doesn't match, you're not passing anything to xargs.

For example:

1. find gets ./.htaccess and calls your -exec.
2. The grep doesn't match anything in the file, so it outputs nothing
3. xargs launches dirname without any arguments, and so dirname thinks it was just misused and displays its help message.

The proper way to do this:

find . -type f -name .htaccess -exec grep -iq '^deny from all$' {} \; -printf '%h\n'