I have just watched "Moonlight Shadow" in 3 versions, and I have to say that, although it is an interesting and 'intense' song with several virtues, it just doesn't 'feel' like what I associate with 'folk'.
The rhythm, tune pattern, and evocation of images are a modern 'pop-rock', singer-songwriter combination. I am not good enough at dissecting these things to spell out every nuance, but the song just 'drives' in a way I don't associate with folk. As performed, it doesn't feel like a song I could sing, or that someone would just sit in their living room and sing with friends.
   Could it be done more simply, without all the added images and drums? Perhaps...but it just feels like a song to be performed, not shared.

As you see, (and many remember about me), I take a fairly narrow view of what ought to be called folk. I like many other songs, I just prefer my favorite category to not be diluted by everything that gets popular or is considered 'good'.