The line is very blurred and nowadays I don't think present day country music has much to do with traditional folk music. This is totally off the cuff, but I think the divergence really started in the 70's when country started to get closer to 'pop', although the commercialization of country music really started with the Carter Family. Another factor - older country artists, such as Dolly Parton, Loretta Lynn, Patsy Cline, Roy Acuff, Hank Williams, etc. did really have roots in traditional folk music , as a poster above pointed out, while the younger artist built off of the pop and country music they heard on the radio.