I wish to use htaccess to redirect all traffic from www.oldsite.com/directory to www.newsite.com

I wish to allow it to be to ensure that when site visitors view any web page within www.oldsite.com/directory (ie. www.oldsite.com/directory/contact.html) it will get rerouted towards the home page of www.newsite.com

I attempted "Redirect /directory http:www.newsite.com" however the web page the customer is attempting to gain access to inside the directory will get connected to the new sites url (ie. www.newsite.com/contact.html)

You should use mod_proxy to create reverse proxy around the old site. Configuration inside the old site would look something similar to this:

ProxyRequests Off

<Proxy *>
Order deny,allow
Allow from all

ProxyPass /directory http://www.newsite.com
ProxyPassReverse /directory http://www.newsite.com

Make certain you activate mod_proxy and mod_proxy_http modules.

You may also make use of the mod_rewrite module using the pressure-proxy [P] flag around the finish from the RewriteRule directive. That will look something similar to this:

RewriteRule ^/directory(.*) http://www.newsite.com$1 [P]

The final option is to make use of simply exterior redirection:

RewriteRule ^/directory(.*) http://www.newsite.com$1

Read a little about mod_proxy and/or mod_rewrite. Watch out some better ideas.