From MorphOS Library
I'm installing MorphOS and the installation script requires that I create and format two partitions: one very small FFS partition for the boot.img file, and one larger, bootable, possibly SFS, partition for system files. You said only one is necessary.
This behaviour of MorphOS installation procedure is justified by the necessity to be compatible with the past. Old versions of the HAL/OF were able to manage only FFS partitions. So the boot.img was put in a FFS partition to let the HAL/OF be able to run it. On the other hand, it was/is better to put system files on a SFS partition, due to its higher reliability. New versions of the HAL/OF can read SFS partitions, and PFS partitions as well, so you can put everything on a single reliable partition.
You said that Quark and other low-level software are compressed in the boot.img file. Compressed?
The boot.img file is a gzip archive, the real image file (e.g. bootpegasos2rom.img) is inside and is extracted and run by the HAL/OF.
You said that in earlier versions of this article that Quark supports memory protection and virtual memory, but it seems these features are not active.
Memory protection did not exist in the AmigaOS, and is not implemented within the ABox of MorphOS for compatibility reasons (almost all the legacy applications would not be able to run correctly with memory protection). On the other hand, memory protection is usable within the QBox and might be available for future applications especially designed for QBox in case a migration of hardware drivers from ABox to QBox will take place. Virtual memory was implemented in the beginning of MorphOS development, but its upgrade is currently halted, due to very low priority. In fact, the maximal RAM requirements of MorphOS and native/legacy programs are very small in comparison with the usual RAM sizes currently available.