Jim, it is commonplace for words to have two (or more) meanings, especially where one is in general use while another has a more technical meaning for specialists. Most activities have their specialist language, because they need to be more specific and nuanced than the general language allows. There is nothing wrong with this jargon, indeed it is absolutely necessary, provided it is used in the correct context.

Your use of "folk" is the technical jargon meaning (for brevity I will write this as "!folk" to distinguish it from the general meaning). It is of necessity precise and restricted in its meaning, and it is intended to be used as a definition of what is under discussion.

The general use of "folk" is more a description of a range of sounds and styles which make up a distinct genre. It is not a definition, and it is not precise because it doesn't need to be. It is mainly concerned with how a performance sounds, rather than the origins of the song itself. It is a useful label to help people to know which rack to go to in record shops, or in the words of Terry Pratchett, to know that "folk music is about to be perpetrated, and give them time to get out of the way." This use of the word has been around since at least the 60s, and possibly earlier, and I do not believe for a moment that you do not understand what it means.

This general use includes traditional song, but this because of the styles in which this is usually performed. Not all !folksong is "folk" - for example, "The Foggy, Foggy Dew" is !folk, but when arranged by Benjamin Britten and performed by Peter Pears it is not "folk". On the other hand, Swan Arcade's version of the Kinks' "Lola" is "folk" because of the style of their performance.

These two meanings are not contradictory or confusing when used in context. However folk clubs exist in the the general world, they are places of entertainment rather than academic study, and it is the general meaning of "folk" which applies to them. Only a small number of clubs restricted themselves entirely to traditional !folk, and that was sufficiently unusual to attract comment. Most clubs have always put on a range of music, including traditional !folk but not limited to it. (Many people interested in "folk" are also interested in !folk, but by no means all of them, and an understanding of !folk is not necessary to enjoy "folk" simply as a form of music).

The reason why I feel this discussion is at cross purposes is that you are insisting on using the jargon !folk meaning when in discussing folk clubs we should be using the general meaning. This is simply pedantic, and unhelpful to the discussion. Folk clubs have always presented a wider range of music than strictly traditional, but usually within the broader scope of "folk" in its general sense.