You were right to take the line of least resistance and not cause a confrontation - but the woman was rude to continue complaining at you after you'd already apologised. She's obviously not a folkie, so I suppose the commonplace practice of the audience joining in is unfamiliar to her.

It might have been an idea to move to another seat IF a decent one was available (which would send a message as well) but in saying Sorry and then keeping quiet you did the best thing under the circumstances. Anything else could have marred the concert because it would risk becoming aggressive. It takes all kinds, I suppose. Maybe she'll discover that she likes this sort of music well enough to want to join in herself...