The captain blasted home from 12 yards after Callum Brittain had blocked his 26th-minute cross with his right arm to improve a home record that was already the best in England.
Watford moved up to third place in the Championship as a result of a third successive home win under Xisco, who succeeded Vladimir Ivic as manager in December.
However, the Hornets trail leaders Norwich by seven points after winning just twice away from home.
"This is a good moment for us because every time we play at home we take the points," Xisco said. "I am very happy with the players but now we must start to win away.
"We are going to work a lot on this and try our best to improve our results away from home. It is something everybody wants in this team."
Deeney fired his penalty almost straight at Jack Walton but it was so powerfully hit the goalkeeper could not keep it out.
"Maybe everybody knows he shoots down the middle but he has big power in the shot," Xisco added.
"I am very happy with Troy. And I don't let our goalkeepers practice penalties against Troy – I don't want any problems."
Barnsley did not create many chances. Indeed, it was Watford defender Francisco Sierralta who came closest to scoring for them with a wayward header that was well saved near the end.
Manager Valerien Ismael declared himself satisfied with his players however, but was not happy with the penalty award.
"The penalty situation is for sure a big frustration because last week against Swansea we had exactly the same situation for us and the referee said play on," he said.
"Then tonight it was a penalty and we need a clear guideline for everybody to know how to handle handball in the box because one week it is like this and another week it is like that.
"That was the reason why we lost tonight but we fought to the end and in the second half we had a big chance with almost an own goal. We created a lot of pressure and stayed in the game.
"We have shown we can compete at this level. We are on the way, and we are near to winning against a top team. That is the next step."