I've been playing acoustic guitar for three years now and have purchased a great deal of Hal-Leonard Easy Guitar with Notes & Tabs. I enjoy simple traditional melodies and can only play by reading Tabs. Could anyone please guide me to play without the aid of Tabs and enable me develop. I have recently subscribed to Spotify which provides a wide range of singers for any searched song. I find this particularly useful because the song's key of my Tabs can be matched to a singer. I am also limited to the first five frets.
Learn to read music
Once you learn even the basics—you don't have to wait until you're a master sight-reader—you'll be able to pull from even more sources including the notation meant for other instruments.
- Get a method book (examples:   ). It will teach you:
- How read music
- Eventually get you past those first 5 frets
- Teach you some technique along the way
- Get a fake book(s).
- There are plenty with "simple, traditional melodies". By nature, they are mostly about simplifying the song down to that.
- You'll get reading practice along the way
Transcribe songs that you like.
It sounds like you're already planning on doing this. Learning songs by ear will give you access to any music at all, really. And it will improve your ear in the process.
It will be a huge help to get a program or something that can loop and slow down a phrase without changing the pitch. For instance, I use Capo on Mac but I'm sure there's something for you if you a different platform.
You can write out the resulting notation, which will also help a bit with the reading having to do it in the reverse order, or you can just memorize it as you go.
Write your own music.
Even you you don't plan on doing much with it (ex. recording it or playing it live), having to come up with a melody, riff, or chord progression yourself can teach you quite a bit.
Anytime you learn something—a chord, a progression, a scale, whatever—spend a bit of time tweaking it into something new or combining it with previous things that you've learned.
Beyond the fact that being creative is virtuous in and of itself, it can teach you quite a bit about how music is put together and in turn make you better at learning other's songs.
I only want to add to what @user37496 has already said with my personal experience.
I, like you, could only read tabs when I began guitar. However, I got a teacher who, while being nice about it, insisted that I only read sheet music, regardless of how slowly I did so. After, say, 10 lessons (10 weeks) I was reading music.
Now, I should note, that this can be difficult, and even counter-productive, for most rock music where, say, the guitarist was making heavy use of block chords and familiar pentatonic and other classic rock riffs and progressions. So, with that said, if you do get a teacher, I would recommend that you learn from pieces that are not of the Hendrix/Clapton variety. This does not need to be classical, but can be Bossa Nova (Bonfa, Baden Powell, Gilberto, etc.), popular jazz pieces, some pop music...there is a lot to choose from.
In short, I highly recommend getting a good teacher that is very comfortable teaching from sheet music.