One way of looking at it whether a song is something you would not be surprised to come across in a folk club (I realise this is a circular argument, but you probably know what I mean). A song need not necessarily reflect traditional structures, but it should carry a coherent message or story and be presented in a way which is compatible with the folk club setting. It's probably music to sit and listen to, rather than to dance to or have in the background. As with so much to do with folk, it's easier to recognise than define. You can't say whether an individual song is "folk", but you do sometimes hear a performer sing a song and wonder "why are they doing that song here?"

The other approach is to ask yourself, if not in a folk club where else would I expect to hear this music? Once, a singer-songwriter with an acoustic guitar would probably once have been described as a folksinger, but so many pop performers also fit this description that it may no longer be valid. Some singer-songwriters have ended up being tagged as "folk" because for some reason their music doesn't comfortably fit into the "pop" category, however they can find a willing audience at a folk club. If there is a more natural audience for a song, it probably doesn't belong in a folk club.

When what is indubitably a pop song gets performed at a folk club it is usually simply as a bit of light relief, but sometimes the more intimate and stripped-down approach of a folk singer can bring a new perspective to a song which brings it into the "folk" circle. This should only be done sparingly, I don't suggest it offers carte-blanche to sing acoustic covers of pop songs, but with the right song and the right singer it can be acceptable, in moderation.