In The Flesh -- In The Spirit

The unsaved person doesn't have the Spirit of God. He lives in the flesh and for the flesh. This doesn't mean that he never does anything good or that the believer never does anything bad. It means that one lives for the flesh and the other lives for the Spirit.

Romans 8:9 But ye are not in the flesh, but in the Spirit, if so be that the Spirit of God dwell in you. Now if any man have not the Spirit of Christ, he is none of his. 

The unsaved person may be moral and even religious; but he is spiritually lost. By faith in Christ, he or she can be filled with God's Spirit and have eternal life.

It's not enough for us to have the Spirit, we must submit to the Spirit. Only then can He share with us the abundant, victorious life that can be ours in Christ. Only then can He guide, warn, feed, comfort, and teach us the truths of God.

Romans 8:16 The Spirit itself beareth witness with our spirit, that we are the children of God: