I bought SuSE Linux Professional 9.1 and my friend asked me for a copy of it, but I'm not sure if it's legal to distribute it, AFAIK the GPL allows you to give away GPL'd programs which you bought but I'm not sure about an entire operating system. I know some distributions are free, i.e. Gentoo but you can't download SuSE Professional 9.1 ISO's from the Internet unlike other distributions. Does anyone know if it's legal to give my friend a copy of it or not?

Yes and no, you are not supposed to give him the CD's that contain commercial isos (or copy them), such as StarOffice or WineX.

2 weeks ago I "received" my copy of SuSE Linux Pro 9.1 from Novell for free. (see: here for more details) The software is free so feel free to redistribute it.
There may be some legal things depending on the distro: I don't think you can buy one SuSE Linux pro 9.1 dvd, make 1.000.000 copies ,resell them and buy an island on the south pacific.
See: here, somewhere at the end.

I can't answer you question, but I've recently been reading gnu's site about what "free" refers to in "free software" and I was amazed to discover that they encourage the selling "free" software for money. The more I read about how all of this works the more it intrigues me!

What I'm gathering thus far is say I write some sort of 3d action/adventure rpg. Someone could theoretically make a profit by selling that software (following with the copyleft rules) even though it can still be distributed for free. They could even change a bunch of stuff and make it more tailored to a racing game, for example. All they have to do is make sure everyone else can do the same thing with their "update." Am I correct in this?

I'm still reading about all of this, but I hope I'm somewhat on the right track.

- Stephen

Yes, and more to the point you are only required to make the source available to people you provide binaries for, whether you charge for them or not.