When I said "I can't hear the difference" I almost qualified it but didn't want to labour the point. I can perceive differences because my expectations are fulfilled but as SS suggested it's mostly about context.
Such differences as there are come down to lyrics, style or instrumentation, none of them totemic or particular to folk. It comes back to this 1954 more/less thing. I find the transcendent and numinous in the tradition (especially on a scratchy 78) but I find it in Robert Wyatt and Bellowhead, Major Lance and Edith Sitwell.

You say there are strong differences between the tradition and contemporary music John P, can you point out how exactly?