The difference is that Woody Guthrie did not hide his source.   I think the problem people have with this is that Dylan used a relatively obscure writer (at least in this country) as his "inspiration" on this album.

As Joe points out, in theory this is the folk process.   Unfortunately the folk process was not a formula for financial gain.   The fact that Dylan made a living off the work of another artist is what rubs people the wrong way. I don't think there is a problem with what Dylan did, but perhaps there should have been compensation involved.

Ron