I'm not going to try to answer this perennial question, but I would like to point out that there is a more basic question that should be addressed.
Does the distinction between categories named Folk Music, Art Music, and/or Pop Music make sense to you?
The term Folk Music was originally coined to distinguish between the music of the peasantry, the Folk, and the sophisticated music written by the professional composers employed by the nobility. Just as it was once easy to distinguish between these two groups of people, it was also easy to distinguish between these two types of music.
Use caution when you try to define what the term Folk Music means today. If you're not careful, echoes of that original definition will begin to creep into your definition. That's fine if you find it useful to divide people into Elite and Common People, but not good if you disagree with that point of view.
One other thought: I once heard a noted folklorist speak. (I'm sorry I can't recall his name, but he was the keynote speaker at one of the early Ralph Page Legacy Weekends.) I'll paraphrase him from memory. He said something much like: "The more research I did, the more I found that the 'dancing, singing throng' I had been taught about didn't exist. All the pieces of folk music that I found had been written by distinct individuals, who were highly valued within their communities for their musical ability."