Interesting thread, Rick.
I remember being told, years ago, that "Gloomy Sunday" was banned, but that may have been part of a hype to get it heard. I dunno.
I may not be able to tell you about a folk song being banned, but I can tell you about a pair of folk singers being banned. In 1967, as I was busily engaged in helping organize anti-Vietnam War activity in Vermont (where we were living at that time), a friend who worked for the Burlington Free Press (ah, ironic name!) told me that a notice had been placed on the bulletin board at the paper to the effect that there would no further mention of the Patons in that publication.
As a result, when some small village church would hire us to do a fund-raiser for their steeple repair, or what have you, the publicity notice they sent to the paper would not appear in print. When they asked why, they got no response. Needless to say, our audiences for such doings dried up and we felt obliged to warn potential concert producers of the problem they would face if they hired us.
About that same time, however, we were planning to move down here to the tropics of northwestern Connecticut, so we sort of slid out from under the problem. Naturally, we continued protesting the war in our new location, and acquired some notoriety down here, as well. It was worth it.
Sandy, with no regrets.