That's pretty accurate. Some of us (in the USA) use "folks" frequently in referring to groups of people: e.g., "Hey, folks, listen up" "The folks at the front office..." and some use it with the more specific meaning of "parents", e.g., "So, what do your folks do?"
But to many others it just sounds...folksy. :) And AFAIK even those of us who do use the noun wouldn't use it in the specific "people of a nation" sense.
Right, that's my point - if a native English speaker reads "the sleeping folk", they are not particularly likely to think it meant "the sleeping people of a nation". But the Swedish phrase can only be interpreted that way. As I said, I know it's technically correct - but it's really not idiomatic to use in that way, so accepting it would very likely teach people the wrong meaning of the Swedish word.