It sounds like you were looking for input from the UK, but I figured I'd go ahead and offer my take on this as an American folk musician.

When it comes to sourcing I'll literally use whatever I come across. Books, recordings, mainstream media and face to face encounters with other musicians. See, in order to be "traditional" there has to be some sort of context in terms of place and time because the role of tradition is to give us a sense of place, a sense of personal history and a sense of connection to our community.

Being a folk musician isn't a matter of playing a particular genre of music or anything like that. It's about taking this thing we call music and using it as a language to express ourselves. That self expression ends up incorporating a pretty diverse amount of information. Who we are as individuals comes across. How and where we learned out craft comes across. How we feel at the moment the music is being played comes across. In other words, our entire story - from our community to our individual personality ends up becoming part of the ingredient of whatever we play. If it's a Child Ballad or some top 40 pop song the overall folk process is still taking place.

I learned to play wandering the streets of Philadelphia bugging every musician I met for help figuring out the banjo and the guitar. That's my story - and as a result that is also my tradition. Twenty-some-odd years later I'm living in rural Maryland and the personal experiences I have had living here have become part of my tradition.

As a musician I can play just about anything you throw at me. Genre is a term that only means something to people who don't grasp the mechanics of music. A Child Ballad or Fergie carrying on about being "T to the A to the S T Y" are little more than different applications of the same basic concepts.

As a folk musician how I use those basic concepts is shaped by my personal experiences.

-Patrick
http://howandtao.com