Checking if a directory exists in FTP without relying on exception handling
don't omit braces {} for single if statements. Using braces in this case will make your code less errorprone.  
you want to return a state, which represents a specific states which shouldn't be restricted to only two states. This just calls for an enum.   

public enum FtpResponse
{
    DirectoryExists, DirectoryNotFound, DirectoryNotSpecified
}


public FtpResponse DirectoryExists(string directory)  
{
    if (String.IsNullOrEmpty(directory))
    {
         return FtpResponse.DirectoryNotSpecified;
    } 
    // the rest of the code

}