Tony,

"Folk songs" is not the only term to be commandeered and redefined.
"Gay" doesn't seem to mean what it used to, either. The trouble is that while "gay" has enough synonyms to replace the original, "folk songs" does not. ("Trad" is insufficient because tradition, by nature, implies repeated usage, generally oer generations. One can no more write a traditional song than make an antique.) Folk songs, unlike other songs are defined by their tranmission or collective creation. Thus, older songs that have survived by popular repitition (Like "Happy Birthday", "Three Blind Mice", "Silent Night") live, not bcause of popular recordings. but through our own singing. Even songs that are created by groups (Like the Korean War version of "Bless 'Em All") are of and by the "folk".
I understand that some very old songs do not experience the changes of what we used to call the "Folk Process". I am thinking of hymns and anthems.
So, "Folk" is an umbrella but it's not limitless. It never meant any song written with accoustic accompaniment. If it did, Jaques Brell or Antonio Carlos Jobim would be the best folksinger of them all