Isn't there a bit on a Rosalie Sorrels record called 'Aunt Molly Jackson Defines Folk Music Once and For All?' I may be misremembering it, but I think the idea is folk music = real people singing about their real lives.Of course that lets in a lot of stuff we might not like. I think sometimes we spend to much time trying to narrow the definition to exclude everything we don't like: add electric guitars, or drums, or god help us the performer actually makes a living performing and it can't be folk music.
I do think there is something about once a song gets loose in the world it becomes part of folk music. I heard a story once that Leonard Cohen was traveling in eastern europe and heard some people singing 'Suzanne' in whatever language they were using. It seems like the point of the story was that the singers had no idea that he was the tune's composer.
As I said in another thread: Folk music wants to be free.
Nora