My house has a separate electrical panel w/interlock switch for my generator that was installed by an electrician. I've used my current generator fine but am looking at a new one. I'm confused by the bonded vs neutral discussion and GFI protection on the generator. I'm pretty sure the one now has GFI protection and I've never had an issue with it tripping. If I'm using the 4 prong twist outlet from the generator can I use a model that has a bonded neutral?
For a GFCI to function properly there cannot be a parallel path on the neutral conductor. By using a GFCI compliant transfer switch, it disconnects the neutral conductor too thus preventing a parallel path. It's a great design to incorporate this extra layer of protection for small portable generators.
Now if you're using a permanently installed generator that is hard-wired you have the option to chose whether to switch the neutral or not. This is technically referred to as separately derived vs non-separately derived and all depends on the particular design setup.
There are advantages to each. One being non-separately derived systems do not require extra ground rods which has a tendency to let lightning back up into the structure damaging electronics. More ground rods do not equal better protection. It can actually cause the opposite to happen.
But again, small portable generators that are not designed to be hard-wired are unique in that they can be separately derived and still not require a extra ground rod as they are portable and not permanently installed.
It's important to have only one ground-neutral bond in the system. The main panel of the house will already have this bond. A bond in the generator too creates the parallel path neutral mentioned in Kris' answer.
That could be overcome in any of three ways: make the main panel bond switched through the transfer switch, disconnect the bond inside the generator, or prevent the generator's ground from interconnecting with the house ground.
IMHO disconnecting the bond in the generator is preferable. Omitting the ground connection at the generator inlet would be easy to do, but I think it's less preferable because somebody who comes along later could easily think the floated ground was an error/omission. Switching the bond that belongs in the main panel just seems like a bad idea all around.
Edit: another DIY.se answer cites a quote from Gen Tran which is now Generac. The citation link no longer works but the same text can be found on the first page of the Installation and Operating Instructions for the Generac 6294 transfer switch kit. Generac recommends disabling the bond in the generator, but if that cannot be done, then use a switched neutral kit accessory in the transfer switch. This is the probably the "GFCI compliant transfer switch" Kris refers to.
The switched neutral kit amounts to an insulated terminal block and a relay. The neutral for the circuits to be run on the generator are moved from the existing neutral bar in the breaker panel to this insulated terminal block. The relay connects this terminal block to the generator neutral or to utility neutral.
Taken to an extreme, where all circuits in the breaker panel would be moved to the switched neutral block, this is equivalent to switching the main panel's ground-neutral bond.