The evolution of the spatial coherence and the polarization has been studied in a freely decaying polariton condensate that is resonantly excited by linearly polarized picosecond laser pulses at the lower and upper sublevels of the lower polariton branch in a high-Q GaAs-based microcavity with a reduced lateral symmetry without excitation of the exciton reservoir. It is found that the condensate inherits the coherence of the exciting laser pulse at both sublevels in a wide range of excitation densities and retains it for several dozen picoseconds. The linear polarization of the photoexcited condensate is retained only in the condensate at the lower sublevel. The linearly polarized condensate excited at the upper sublevel loses its stability at the excitation densities higher a threshold value: it enters a regime of internal Josephson oscillations with strongly oscillating circular and diagonal linear degrees of polarization. The polariton–polariton interaction leads to the nonlinear Josephson effects at high condensate densities. All the effects are well described in terms of the spinor Gross–Pitaevskii equations. The cause of the polarization instability of the condensate is shown to be the spin anisotropy of the polariton–polariton interaction.