Does a GPS OBS selector use magnetic or true courses?
Magnetic, except for places on Earth where it would be truly ridiculous (such as high latitudes).

Basically, you want to navigate with one reference or the other, no matter which method you are using, to avoid confusion. Using magnetic reference is somewhat of a legacy: it's natural to use it when your primary method of navigation is a compass. Or even not a primary: stars and INS are referenced to True, but the pilot should be able to fall back on the compass at any moment (and cross check the instruments), so a correction (= variation) is always maintained.

GPS naturally works in True coordinates. But to provide 'backward compatibility' it also calculates Magnetic track. To do that, the avionics must maintain a current database of magnetic variation across the globe.

Furthermore, remember that GPS cannot really measure the heading, it can only measure the track. Heading is still measured using gyros, which are periodically corrected using magnetometer, i.e. the same compass.

Modern avionics can be switched between Magnetic and True references (see, for example, the G1000 guide). So technically the answer to your question would be 'it depends on the mode', but usually it is expected to be Magnetic.