Uncle Dave O: you have a problem with the"uninfluenced by popular and art music" part of the definition. But that is only in the first part of the relevant sentence. The second part covers folk music in communities where the condition does not apply. They weren't totally stupid when they drew up document, they were perfectly aware that folk music reacted with other forms.
   I have plenty of problems with the definition, and can think of ways it can be modified. But what I am totally sure of is that it is a legitimate attempt to define a branch of music which is distinctively different from some other forms.And "folk" was the word they chose for that branch of music. It's not an old term, it was deliberately coined as a means of classifying the music.Zebras belong to a species, even if they don't use the words "zebra" or "species" themselves.
Tinkering with the definition, therefore, as far as I am concerned should merely tighten up the accuracy of the analysis. It should not broaden the category so as to make folk indistinguishable from other forms of music.
    But remember, folk is defined by a lot of things. There are three questions to ask: how was it made, what does it sound like, and what is it used for? Any one of the answers can make it folk.