I fear that nothing any of us might say here will cause anyone else to change their opinions, but let's try a few observations.

Steve R's book is concerned with what where and when people sang for the sake of singing rather than as professional performers (though there is a slightly grey area of acknowledged traditional performers singing for beer). Jim's beef (if I understand aright) is that Steve has applied the label "folk song" to whatever people sang, ignoring origins; but even the "1954" definition includes material of non-"folk" origin if that material has been traditionally transmitted.

People sing whatever songs they come across and take a fancy to, whether those songs are old or new and whether they are about ordinary people in their own time, kings and lords of centuries ago, or characters of myth. Songs that got printed on broadsides stood a much better chance of spreading, surviving and being collected than those that never got printed, regardless of where they had originated. So it is only to be expected that the bulk of the classic collected corpus (as sampled, according to different criteria, in the old and new Penguin books) can be traced to broadsides.

Opinions differ as to what proportion of them started life on those broadsides and what proportion started life with the people whose affairs they describe, but we all accept that there were some of each. No-one here denies that ordinary people, who had day jobs other than song writing, could and did make songs. Opinions differ as to how widespread this was, but certainly some of those people did, as people still do.

We all acknowledge that the professional writers churned songs out by the yard and that most of those either were only intended to be ephemeral or were too poor to survive for long.

We can look at a particular song and surmise whether it was made by the person concerned, by a professional song writer who heard the person's tale and turned it into song, or by a professional song writer out of his/her own head. Internal evidence includes the style of wording, the use of stock phrases, whether the account seems true to life or idealised, etc, but we can seldom be absolutely certain. Even a song which is positively identified as having been performed on the stage could have existed in oral tradition before that.

Let's take each one on its individual merits
a) as a song that we enjoy singing or hearing for its own sake, and
b) as possible evidence of how things really were for certain people at a certain time in the past.