What OS will work on this GS?

["Janger" <d_janger@hotmail.com>]

A friend recently gave me an old Apple 2 GS to have a look at because she
couldn't get it going. She had aquired it second hand, without any disks,
and so called in to an Apple agent where she paid for a set of OS disks.
Well, she was sold a copy of System 6.0.1. Now, I don't know much about
Apples (especially old ones!) but this is what I've found so far:

* Her system has no HD.
* The system has 512k Ram (Maximum Selectable Block(256k) + 256k  - is this
correct?)
* An error occurs during booting (not every time) of the system disk  -
$0201 ff02.
*The same error occurs at other times, like disk swapping etc.

I've read some FAQ's and other tidbits off the net, and have heard that
System 6.0.1 will only work with at least 1Meg of Ram. Also, I notice that
system error $0201 is an out of memory error. So, is that what's reported by
the first four digits of my error?
If this is the case, what OS's can be used on my friends system? I guess
probably System 6.0, and I think ProDos 8 can be run as well, can't it?