The key to understanding this passage may be how Paul uses the word “alive” in association with sin—that sin came "alive" when the commandment came. This certainly doesn't mean that there was no sin before the giving of the law. Sin had been alive and active ever since it came into the world through the Fall of Adam and Eve. So then, being "alive" here cannot mean coming into existence. Rather, it means becoming "official," if you will. What had been experientially true--man's sinfulness--was becoming legally and officially recognized by the law, God's official standard of righteousness. So Paul says in v. 13, “[What brought death to me] was sin, producing death in me through what is good [i.e., the law], in order that sin might be shown to be sin…,” such as covetousness. Maybe we can liken it to Newton’s discovery of gravity. It had been at work all along and we’ve been under its influence all that time. But when Newton discovered it, it came to be alive in our consciousness. For Israel to be alive apart from the law, then, doesn't necessarily mean that they lived in a sinless state. Paul's emphasis here is the impact of the law--specifically, making clear the sinfulness of sin and its deadly consequences.
So then, what is described in our passage seems to be the condition of God’s people after the law came. But here is what makes this complicated. Paul says, “…when the commandment came, sin came alive and I died” (Rom. 7:9); “For sin, seizing an opportunity through the commandment, deceived me and through it killed me (Rom7:11). But the person in our passage is not quite dead. What he wants to do is what the law of God commands: "I do not do what I want, but I do the very thing I hate. Now if I do what I do not want, I agree with the law, that it is good" (vv. 15-16); "I have the desire to do what is right…" (v. 18); "I delight in the law of God, in my inner being" (v. 22). Can a totally depraved sinner delight in the law of God and desire to do what it commands? Paul says, no: "For those who live according to the flesh set their minds on the things of the flesh…. For the mind that is set on the flesh is hostile to God, for it does not submit to God's law; indeed, it cannot. Those who are in the flesh cannot please God " (Rom. 8:5, 7-8). Is the person in our passage a believer or an unbeliever?