If folk music exists as a seperate body at all, surely it lives in the minds of "folk", and is the music, whether repeated from previous knowledge or spontaneously composed at the time, that "folk" want to sing or play. It cannot be defined from outside.
The fact that there may be traditional forms is really irrelevant to this, and if those forms are used in performance to others (as in folk clubs or other concert setting), then DURING THE PERFORMANCE that music ceases to be folk music, and becomes "art" music. (Thats why you rehearse)
And the fact that we are musicians doesn't give us the right to say what music "folk" should like. We just have to accept it, if it fits in with our scheme or not.
"Folk" love to sing their music at Karaoke sessions. Sorry!
If you have a guitar or fiddle they may ask YOU to play while they sing. But you had better know the songs folk like!
One of the oldest forms of entertainment is the recitation of poetry to a rhythmic musical background (Beowulf, Renard etc).
Currently this is called Rap.(I don't think much of the poems though)
None of this is to suggest that we shouln't keep playing the tunes we know and love, and have done for the last 5/10......./75 years. These are own personal folk tunes, even if Purcell wrote some of them.