So an individual known author can create folk music so long as it is "no longer recognised as the work of an individual author".

Seems pretty straightforward to me - if it's "one of those songs that we sing" and gets passed on as such, then it's a folk song.

AND THIS IS NOT A VALUE JUDGMENT. Some folk songs are crap; some composed songs pin back the ears of everyone for miles around. They're still not the same thing.