I've retold and published several folktales. First, I'd advise you to work from three or four versions of the story you want to retell--you don't want to borrow any one person's wording. Make sure the folktale is in the public domain (more than 100 years old).
If someone in recent times, such as Disney, has retold the story, you don't want to include any of those elements. For example, when I was writing CINDER EDNA, I was advised by my editor to use the Perrault version of the story, not Disney's. (The Disney version has a current copyright.)
Your local librarian can help find collections of folktales and there's a reference book that can give you the original source for a particular tale and also tell you which collections include a version of the story. I think the reference is called STORYTELLER'S SOURCE BOOK or something like that. (Any librarians who know the exact title?)
Include an Author's Note at the end, telling which versions of the story you used. Good luck!
Ellen Jackson
www.ellenjackson.netP.S. The folktales I've published include: A TALE OF TWO TURKEYS, THE IMPOSSIBLE RIDDLE, SCATTERBRAIN SAM, WHY COYOTE SINGS TO THE MOON, and CINDER EDNA.