Julie
I think that this was a very complicated way of saying that we are saved from sin by Christ but if we live in the flesh we are still sinful. If we live in the spirit we are forgiven of our sins.
God is the only one that can place judgment. We have not right to judge others.
Michelle
I did not understand the beginning of this section, chapter 7. But I could assume what you are stating is what it is about. What I did get as I read on, we should live our lives according to the spirit and what the spirit wants and not live in the flesh and be slaves to the desires of our flesh. If we are followers of Christ, we need to be followers of the desires of the spirit and be mindful of what our flesh wants verses what the spirit wants. It's basically a daily struggle to maintain our focus on God and how we are to live our lives according to his purpose.
What stood out in this psalm is when he says that God has no need for animal sacrifices as all the animals are God's anyway. If he wanted them, he would just take them.