I had a year-long binge in folk music.
I'm not a big fan of American roots folk-y music. Bob Dylan etc. don't do much for me. The Imagined Village is a cool band with a few great songs, but I find them very inconsistent. Probably because they're all over the place.
Among modern American folk offerings, Fleet Foxes is probably my favorite. They're oh-so-popular, but that doesn't mean squat to me.
Folk & Rackare, Swedish folk, probably the most 'pure' folk I listen to.
I couldn't find their best song on youtube, "Harpans kraft."
Garmarna, Swedish electronic folk. Like F&R, they base a lot of their stuff on medieval tunes.
Lumsk, Norwegian folk rock, sometimes metal. Det Vilde Kor is one of the best albums ever made. The lyrics are taken from Knut Hamsun's work by the same name (Det Vilde Kor - the wild choir) written in the early 1900s.
Then, of course, there are the British folk-rock bands of the 60s/70s. Trees, The Pentangle, Fairport Convention, Tudor Lodge, Mellow Candle, and many more.
Among them, I've found Steeleye Span's Hark! The Village Wait to be the best album:
But this is of course if we're excluding stuff like Jethro Tull (who would otherwise top the list with Songs from the Woods and Heavy Horses) and bands which didn't really identify themselves as "folk bands". Even the Beatles had folk songs on their repertoire.
Two somewhat popular non-British European folk bands of the 70s-and-later are Folque (Nor-Swe) and Malicorne (Fra). Both are very hit-and-miss from what I've heard. Folque has some very beautiful songs tho: