Assumptions - Fletcher's Trolley

The applet simulates the motion of two blocks connected by a string that is guided over a pulley.

The system has no dissipative friction. There is friction between the string and the pulley so that the movement of the string causes the pulley to rotate as the blocks move. However, this friction is not dissipative because there is no slippage of the string relative to the pulley.
The string is inextensible and massless, and both blocks move in unison.
Magnitude of acceleration due to gravity = g = 9.8 m/s².
The pulley's moment of inertia I is set by means of a slider. However, the slider indicates only the pulley's mass. In relating the pulley's mass to the pulley's moment of inertia, it is assumed that the pulley is a disk of uniform mass density, so that I = 0.5MR². The value of the pulley's moment of inertia is displayed in the Data box.
The radius R of the pulley has a fixed value of 0.500 m. This is quite a large radius. However, if the radius were much smaller, the inertial effects of the pulley would be very slight, as long as we take the pulley mass to be of the same order of magnitude as the masses of the blocks.
The potential energy of Block 2 is defined so that it is 0 when the lower edge of the block is at h = 0. The zero of the potential energy is indicated by the short horizontal line through the potential energy bar. When Block 2 (its lower edge) is at h = 0, the top of the blue potential energy bar is at h = 0 as well. This level is also the zero of the total mechanical energy.
You should imagine the potential energy bar to reach up from negative infinity to its visible height, i.e., to extend below the bottom of the applet window. When the top of the potential energy bar is below its zero level at h = 0, the potential energy is negative. Potential energies can be negative, as can the total mechanical energy. Kinetic energies, of course, are never negative, by definition.

Note. The energies displayed by the applet belong to a system consisting of the two blocks, the pulley, the string, and the earth. PE₂ is the potential energy of the pair consisting of Block 2 and the earth. For brevity, it is customary to refer to this potential energy as the "potential energy of Block 2."