Jo Stafford's "American Folk Songs," a Capitol LP circa 1950 and still (I think) available on CD. Surprisingly effective arrangements by Paul Weston, her husband, and Stafford has a real (albeit pop-based) feeling for the song, and a fine voice.

And no one should forget the extraordinary "Songs of the Auvergne," composed based on folksongs of that region of France by "Le bard d'Auvergne," Joseph Canteloube.

Not sure this fits the definition, but the Moscow Gypsy Theater has done some enchanting small-orchestra work with folk and popular songs.

Good orchestral folksong arrangements would have to include the fine calypso work done behind many of the classic calypso singers (Macbeth, the Lion, the Tiger, Houdini et al) by such fine aggregations as Gerald Clarke and His Orchestra.

... etc.